Hi Jack,
There used to be a website created and ran by a guy who did some complicated hedging strategies using 1X long and short funds. He was a math whiz and frankly it all went straight over my head. A few years ago he decided to give up the website and has since shut it down. In his last message he said that if someone wanted to "hedge" their long positions for the long term, they easily could do it by buying and holding a 2X S&P 500 inverse bear ETF, like SDS, with 25% of their investments. At the time he thought that should be a sufficient hedge for their long positions.
Seems to me that his last message on his website was around the beginning of 2007, but I could be wrong about that. Gave it some thought, but it did not seem feasible at the time. Sure wish I had done it back then, but when do you liquidate the entire position?. Who would have known we would have a 50% bounce off the March lows?
Since this market has come so far so fast that might possibly be a reasonable strategy at this time. However, I am not nearly as good with math as most readers here, so someone else would need to take out their pencil and calculator to see how that might work. Especially if they AIM'ed the 2x inverse bear fund.
Just throwing this out there for whatever it might be worth.
Regards,
Ray
AI
