"How to Profit in Hard Times" books

[kyounge1956]

I'm reading Crash Profits by Martin Weiss and checked out but haven't yet read How to Prosper During the Coming Bad Years in the 21st Century by Howard Ruff. I have opened my Roth IRA at Scottrade and rolled over my other accounts into it. Right now that money is just sitting in cash, but I'm toying with the idea of buying a reverse index fund (if they have one—I haven't checked yet) with some of it. This is one of the ideas described in Crash Profits.

Has anyone ever put the suggestions of such a book into effect? If so, how did it turn out?

 

[FIREd]

Well I didn't read any such "how to prosper in bad times" book but I did purchase a bear market fund last year. I think it is a great way to tame your portfolio's volatility when the market goes crazy but I wouldn't hold that fund forever given the fact that, over the long term, the market typically trends up. I bought it as an insurance against a severe market decline, and now that the market has indeed declined I sold it and locked in my profits, though a bit early (still, about +25% gain). I reinvested the proceeds of the sale in the stock market. I would personally hesitate to buy a reverse index right now because the market has been hammered so much already. But if you think that the market is going much lower, and you are right, then it could indeed be very profitable. I also heard people using inverse index funds to get market neutral (50% index + 50% reverse index), but I am not quite sure how it's better than 100% cash. Maybe somebody can enlighten me?

 

[Frugality_of_Apathy]

I could see going 50/50 if you already had your money in the market, you had no idea what the market was going to do, and the transfer fees were significantly lower than the withdrawl fees.

 

[kyounge1956]

(snip) I also heard people using inverse index funds to get market neutral (50% index + 50% reverse index), but I am not quite sure how it's better than 100% cash. Maybe somebody can enlighten me?

You and me both. Wouldn't half index and half reverse-index cancel each other out, producing a net growth rate of zilch?

At least with cash you get interest.

 

[dex]

I also heard people using inverse index funds to get market neutral (50% index + 50% reverse index), but I am not quite sure how it's better than 100% cash. Maybe somebody can enlighten me?

My guess - you know when to get out of the reverse but not when to get in with the longs.

It doesn't make a lot of sense to me either.

 

[CompoundInterestFan]

The market aside, I'll bet that writing a book called "How to Profit in Hard Times" could be a pretty good way to profit in hard times.

 

[Lusitan]

The market aside, I'll bet that writing a book called "How to Profit in Hard Times" could be a pretty good way to profit in hard times.

Darn it - another Great Idea I Didn't Think of First.

 

[Gardnr]

I would personally hesitate to buy a reverse index right now because the market has been hammered so much already. But if you think that the market is going much lower, and you are right, then it could indeed be very profitable.

Assuming that a "reverse index" fund is indeed a bear mkt fund or a short fund (I've never heard them referred to in this way before), I'd totally agree with you. This feels a lot like buying big into the market (long) in 2000 or 2007. It's a very risky play at this point. You could get your head taken off doing this. Even doomsday predictions of a 600 level on the S&P 500 is only 20% down from here. We're much more likely to get lots more than that on the upside from here, IMO.

I know a lot of people have made a lot of money shorting market up 'til now, but when the average Joe starts to think of going short it sure feels like the reverse of the bull top when everybody finally gets in just before the decline. I wonder how many are doing that right now. Could be another sign of the bottom. I sure hope so!!

 

[kyounge1956]

The market aside, I'll bet that writing a book called "How to Profit in Hard Times" could be a pretty good way to profit in hard times.

It would be fabulous! The only problem is, I don't know what to write between "It was November 2008 and the S&P had dropped by almost half since the beginning of the second quarter ..." and "...just remember, by following these five simple steps, you can make the same big profits I did—even in hard times."