Stock Watchers: Comments on the Prudent Bear Fund

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Shorting the market makes me a little nervous. However, I have noticed that my Prudent Bear holdings (symbol: BEARX) have done quite well even on those days where gold and the market fought against market shorts. It appears that, following the understandable shellacking Tice took trying to short internets earlier in the year, he is now showing his true skills. For the those of you who have been pondering using it to play the downside of the market, I now feel more confortable recommending it with enthusiasm. I believe this guy is minimizing upside risks (funny term) and maximizing the downside gains pretty successfully. Thanks to the poster who recommended this to me back in May.

-- Dave (aaa@aaa.com), October 08, 1999

Answers

Kudos on this conservative short play on the stock market. One would get hammered trying to play stock index futures or put options in this type of market. This mutual fund approach takes the emotion out of an individual trying to make day to day decisions on a game that isn't suited for the little guy. Just like a dollar stock averaging approach to get into a market, send the Prudent Bear a check on a regular basis and don't worry about daily moves. Like a lot of us, I was expecting another Oct thrashing, but markets are never this predictable. As I look at my CNBC sceen, we're up another 16 points on the S&P today. Prudent Bear is the best of the bunch. Find a good precious metals fund also, like Midas, and do the same thing. Quit trying to hit the grand slams and go with these lower risk funds (meaning lower risk than futures or options, relative to other funds, these are actually pretty high risk).

I also assume most of this forum will be pulling out of these and getting liquid b4 the end of the year. Correct?

-- Downstreamer (downstream@bigfoot.com), October 08, 1999.


Interesting question about the exit strategy. If the market corrects before the end of the year, then I will certainly pull the plug. It's not so obvious what to do if somehow the house of cards stays erect. Do you hold onto your shorts (I love that phrase) through the rollover confident that they will pay big? Do you sell them worried about (a) a seizing up of the whole system or, (b) the fear of a dead cat bounce in January as people rush back in? My inclination is to not hold my positions betting against the market through the rollover. Comments?

-- Dave (aaa@aaa.com), October 08, 1999.

I have been in it since mid-August. So far I have done well but today looks tough. I like it a lot long term.

Your mileage may vary.

-- Mike Lang (webflier@erols.com), October 08, 1999.


I joined Prudent Bear about two weeks ago. I refer to it as Imprudent Bear because it is much more volatile than the other reverse fund that I studied (Ursa in the Rydex group). My strategy is to hold no matter how good the news is because I am convinced that the Yourdon 4-7 scenario will arrive even as late at 2Q 2000. But it is a very scary ride since it can lose so much so quickly. I plan to dump a bunch more cash into it in December if the investment world has held together because of all the rosey info' in the popular sources.

-- Dana (A_non_o_Moose@xxx.com), October 08, 1999.

Be prepared for the unexpected panic.

If you're heavily invested, then your stress level can cause cardiac arrest in the weeks ahead.

Chill out and withdraw while you can.

-- Randolph (dinosaur@williams-net.com), October 08, 1999.



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