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The next bubble to burst: Option/ETF



October 22, 2008 – Comments (2)

Reviewing my performance thus fur, I was forced to come to an unlikely conclusion: the only way I can earn a cent in this market is to buy S&P puts and ultrashorts. The remarkable part is that buying puts and ultrashorts seems to work under any conditions. Timing does not matter. Bad entry point? Don't worry, 3-4 trading days will justify your decision anyway. Your portfolio is down 30%? Never mind, double down, and in 2 days it will shine again. In other words, any fool can make money. Which means we're in a bubble.

How do you know when you should head to the exit? One sure sign is when your gardener starts giving you stock tips. You won't time it perfectly, you know that the bubble will likely keep growing for the next few months anyway, but this is the time to start trimming your position. Another sure sign is when the Gardners launch another special report or newsletter devoted to the latest hot theme. The launch of Global Gains and the launch of Special Commodity Report highlighting the 8 hot commodity stocks consided precisely with the bursting of both bubbles. So when you see them start MF PRO, you know that pricing of options and the popularity of ultra-shorts will be gradually decreasing over the next several years.

2 Comments – Post Your Own

#1) On October 22, 2008 at 4:19 PM, goldminingXpert (28.79) wrote:

enjoy the ride, my largest two put option positions were up 65% and 41% today.

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#2) On October 22, 2008 at 4:28 PM, starbucks4ever (92.12) wrote:

I'm hedging heavily like everyone these days. But I'm also aware this money-making machine will not run forever.

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