Hi J, Re: Inverse funds...............
There are some "non leveraged" ETFs that follow various indexes on both the bull and bear sides. Essentially 1X funds. This don't have the high expense ratios that the 2X funds have which should help to improve overall performance if you are to try this.
Given enough full cycles, such an idea should work. However, to be "best" it would require complete reversion to the mean periodically with no advance in the overall long index values over time. While we do have periods of essentially "flat" markets (range bound is a better description) the historical trend has been upward. So, the "short" fund would be betting against the long term trend and therefore never equalling the "long" fund. Potentially the short fund, after a few cycles, could use up a greater portion of the cash reserve than it manages to return. This could create an imbalance that might never be recovered.
If one saw the onset of a major macroeconomic change (such as the advance of socialism as the main engine of the U.S. economy) which would create a long term range bound market, then working the two funds against each other would work well.
Best regards, Tom
Best regards, Tom
Port Washington, WI 53074
