fOOD4: I can't believe you capitulated at this late date. The market is absolutely poised to roll over. The VIX hit 15.54 today!
That is extraordinarily low during the course of a secular bear market. If I we're investing $100,000 today I would go one of two ways. For the short term I'd stick 1/2 on TZA and 1/2 on BGZ.
If I was playing a move for the next several years and was planning to hold it > 1 year in an account that was not tax deferred I'd put it all in SRS. SRS is an Ultra Short Real estate play. It's currently trading @ $5.60. So many factors are lining up against real estate that SRS is bound to increase significantly. Interest rates are on the rise. Foreclosures are not abating and in fact have been start to accelerate once again. Millions of mortgage loans are > 90 days delinquint. Many people are teetering on the edge. A 10% further drop in housing prices will induce many, many more underwater borrowers to strategically default. In a few years the banks will be auctioning off homes for dimes on the dollar. We'll need another "Resolution Trust" kind of program to rid the banks of all the foreclosures. This phony market rally has been due to a manipulated market influenced by Fed participation in the overnight futures markets. Almost all of the rise since last fall has occurred due to "gap ups" after an overnight rise in the futures. You can look back at the trading since September. I'm not making this stuff up. The Dow at 11,000 is fantasy land. But oversold and overbought markets often become more ridiculously priced before they correct, but they will always correct eventually. I still have a few hundred grand in cash. Earning season has begun and might induce a slight further rally, perhaps as high as 11,150 on the Dow and 1220-ish on the S&P. But roll over comes after that and they've already had a hard time pushing the market this high. The house of cards will fall. I was far too early on calling for a correction. I have never encountered a market manipulated to this extent before. But the manipulation was counterproductive. If they had let the market correct in September, or in December, or even in January, we would have hit the mid 900's in the S&P and bounced possibly as high as 1300 on the S&P. Now we're going to see the intermediate high water mark barely above 1200 before the correction actually hits. You're going to regret abandoning your short positions at this critical juncture. I'm sorry you were compelled to do so. I have taken some lumps but will recoup a large portion of that over the next 4-6 weeks. Afterwards I'll shift into some inflation plays like GDXJ and GDX. And I can't help but think that SRS will at least double (or better) over the next several years. It's dropped from > $200 a share to @ $5.61.
Bill Gross of PIMCO is selling Treasuries like a madman, with certain knowledge that interest rates are going to rise, and rise substantially. That will be the ultimate cause of another real estate price meltdown.
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