Originally Posted by DOG51
Anyone here believe that this is a good idea for added diversification?
It makes no logical or mathematical sense. The whole point of diversification is to put your money into uncorrelated
A "bear fund" is typically very strongly negatively
correlated to something long (usually an index). If you hold anything resembling that index, you are working perfectly at cross-purposes to yourself.
negative correlation is not the same thing as no correlation.
You'd come out better by selling the same amount of your long holdings that were perfectly negatively correlated to the bear fund and putting the money into cash.