Good way to diversify? (hedge & shorts)

[mark-ER]

Sup!

Well, despite 3-day running high for the DOW and S&P 500, many investors (and this board in particular) feels we are waiting for more storms to come. I would generally agree, so I'm looking at giving myself a cushion.

I seriously thought about investing in a fund that posts in shorts against major DOW and S&P stocks and moves inverse to major indexes, when I came across HSGFX: Hussman Inv. Strategic Growth. Seems like the best of both worlds -- growth opportunity in bull market, capital preservation in bear market and 'relatively' low fees. Please, tell me what's wrong with this picture -- there's gotta be a catch. My best guess is that it's reliant on the managers' timing of the market conditions, though probably better/more flexible than the brute indexing strategy, though likely more expensive.

Here are the links:

http://marketwatch.com/tools/mutual...HSGFX&sid=377062&fundtab=overview&siteid=mktw

http://www.fool.com/news/commentary...sit=y?logvisit=y&source=estmarhln001999&npu=y

Thanks for the advice.

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[whopper]

I try to stick to a few good stocks and try to get to know them inside out. Then, after you've been with the stock for several weeks, you can get a feel and notice what trends cause the chaotic tides that'll affect the ups & downs.

Diversifying? I'm not expert. Heck I've been only relying on what I see on MAD MONEY to know what I'm doing there. Its working though. I try to put stocks in areas that are affected by different trends--not the same trend.

E.g. metals go up with oil, and go down with oil. So don't put all your money into stocks that also are heavily dependent on the price of oil--e.g. health, biotech are ones that aren't directly linked to oil prices (although to some degree most stocks are--its just that metals at this point seem to coincide almost directly to oil prices).

I've been enjoying Mad Money, but I realize its more of a fun-entertainment thing and can't be taken too too seriously. Some of Cramer's stocks go down, and sometimes, if you dive in--you're doing so because everyother joker is after they saw the episode--so the stock is now pumped up and ready for a fall.

I'm with Cramer on this pick--if the market goes bull--AUY (or TRE for me). Both are metals mining companies. AUY is the top pick stock for gold mining. They tend to go up when the market goes down. So if you're anticipating a fall in the market--look for the stocks that go up when the market goes down. Of course do your own research and take what I say with a grain of salt!

Personally-I'm thinking the market may fall on Monday because OPEC stated they will be announcing whether or not they'll cut oil production by 1 million barrels per day. The president of OPEC stated he is expecting this to happen. So I'm thinking TRE & AUY will be bulls on Monday.

 

[ttac]

Hopefully, oil WILL go up as OPEC announces cuts... then my ethanol stocks will too

ttac

 

[ncalcate]

I've been enjoying Mad Money, but I realize its more of a fun-entertainment thing and can't be taken too too seriously. Some of Cramer's stocks go down, and sometimes, if you dive in--you're doing so because everyother joker is after they saw the episode--so the stock is now pumped up and ready for a fall.

Cramer is certainly entertaining. But that is all he is - an entertainer. Regardless of all the hype of his being a former hedge fund manager and Goldman Sachs alumni, he is paid to bring in viewers to CNBC - not to make money. If he were being paid to make investors money, he would still be a hedge fund manager.

For a good laugh, check out http://www.cramerwatch.org/. Here, Cramer's picks are compared to a flip of the coin by Leonard the Monkey. A lot of the time, Leonard beats Cramer. Kindof funny.

But Cramer is fun to watch - as long as you don't take any of his picks too seriously.

 

[etf]

yeah, i used to watch cramer all the time, but more for the stuff he says that doesn't have to do with stocks (like when he talks about historical facts and stuff). i myself have a set group of stocks, and whatever money I want to "invest" I just put in to those specific stocks when I see them at a reasonable discount. i'm one who really tries to see stocks as part ownership in a business. for short term "trades", however, i exclusively use options. it's all worked pretty well so far...

 

[Doctor]

i'm one who really tries to see stocks as part ownership in a business.

A wise philosophy.

 

[Jocomama]

Those that have the wealth are not picking stocks and worrying about the market in a month.

Buy what you know, what you like, and leave it alone.

Cover with aggressive stocks, dividend stocks, foreign, precious metcals, energy, bank and service.
Cover that with some fixed income securities (Mortgage, PIMCO bond fund, Tax free municipals)

But don't focus on figuring out the market - unless you want to work in a money management or analytic career.

A wise philosophy.

 

[Bernardo_11]

Those that have the wealth are not picking stocks and worrying about the market in a month.

Buy what you know, what you like, and leave it alone.

Cover with aggressive stocks, dividend stocks, foreign, precious metcals, energy, bank and service.
Cover that with some fixed income securities (Mortgage, PIMCO bond fund, Tax free municipals)

But don't focus on figuring out the market - unless you want to work in a money management or analytic career.

Do you think investing in a life cycle fund accomplishes most of this, Joco?

Thanks,
Nardo

 

[etf]

Do you think investing in a life cycle fund accomplishes most of this, Joco?

Thanks,
Nardo

lifecycle funds are great - if they have the appropriate asset allocation and low fees. once again, fidelity and vanguard win here. truly hands off.

 

[The White Coat Investor]

Do you think investing in a life cycle fund accomplishes most of this, Joco?

Thanks,
Nardo

I'm not Joco, but I think a quality life cycle fund such as those at Vanguard, Fidelity, and T. Rowe Price will end up outperforming at least half of those of us who think we know better. Invest in a life cycle fund and concentrate on a number that really matters at this stage in life, your savings percentage.

 

[Twitch]

I'm not Joco, but I think a quality life cycle fund such as those at Vanguard, Fidelity, and T. Rowe Price will end up outperforming at least half of those of us who think we know better. Invest in a life cycle fund and concentrate on a number that really matters at this stage in life, your savings percentage.

Perhaps, though the distribution may not be to your liking. For instance, Vanguard's target funds have less than 3% exposure to emerging markets. Perhaps that a good enough risk %age for some people. But the point is you can't tweak it to your liking. Additionally, look at the fund expenses. An ETF may be another option, if you can live with the spread and have a way around the tx cost (e.g. wellstrade).