UltraShort Basic Materials ProShares (AMEX:SMN)

unstoppablepeon (< 20) Submitted: 10/26/2008 11:35:53 PM : Start Price: $309.59 SMN Score: -150.88

etf short

MSGTB (30.82) Submitted: 8/20/2008 7:44:33 PM : Start Price: $106.93 SMN Score: -90.70

Not going to build a lot of new houses.

southseacapital (94.93) Submitted: 6/14/2008 12:55:41 PM : Start Price: $120.79 SMN Score: +76.07

Basic Materials Ultrashort.

So I picked red thumb on this a while back simply because it was an ultra short fund. I've come back to it wondering about my move from here. I was going to close this because we the prices of basic materials are getting fairly pricey. I did some math on the back of a receipt and here is the theory I came up with.

With a LONG RUN red thumb you are getting:
- 0% + Inflation + plus small crowded world effect. Lets call it +3.5%. This is an inverse fund, so +7%.
- Red thumb gives me that .95% expense ratio.
- The long run market returns for the S&P will be around 8% (the days of 10% are gone). So with a red thumb that is added to my score.

7% + .95% + 8% = +15.95%. Now compare that with the risk of a bubble bursting. IE if the bubble bursts today and hammers me for -32%, it'll take 2 years to break even. I doubt the burst will be that significant, The red thumb seems sound.

Very very quick calcs, I could be stupid.