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You can not short mutual funds, but there are some index oriented
funds typically based on SPX / NDX / RUT that are built to track
inversely from the indexes themselves. So the purchase of these
would equate roughly to the shorting of the index.
Someone will undoubtedly come along and slap me upside the head for
saying this but imho the short side of the market is more difficult
to play than the long side. There are several reasons for this not
the least of which is that if for no other reason than inflation the
bias of the market is from a very long term perspective, up. If one
were to look at how many up days there were versus how many down days
one would see that over a very long period of time that the ratio is
about 60/40. This is easy to see when looking at long term charts as
the character of bull markts is differnet then that of bears, where
the former has a tendancy to take a lot longer to move a similar
distance then the latter when one is looking at environments that are
of equal degree.
--- In amibroker@xxxxxxxxxxxxxxx, "jtelang" <jtelang@xxxx> wrote:
> Fred,
>
> From this, do I understand it correctly that one can't go
> short on MF's? Why would one be sitting on cash otherwise?
> Or may be I'm not following what you said below...
>
> Jitu
>
> --- In amibroker@xxxxxxxxxxxxxxx, "Fred" <fctonetti@xxxx> wrote:
> > One other note regarding short term trading ... There are of
course
> > ways to accomplish the same thing with out actually taking the
> short
> > term trades i.e. by hedging using a bear oriented fund leaving
you
> > more or less market neutral during the period of time when you
> would
> > have been sitting in cash.
> >
> > --- In amibroker@xxxxxxxxxxxxxxx, "Fred" <fctonetti@xxxx> wrote:
> > > See below ...
> > >
> > > --- In amibroker@xxxxxxxxxxxxxxx, "Chuck Rademacher"
> > > <chuck_rademacher@x> wrote:
> > > > Maybe some of you guys (and gals) who trade mutual funds can
> > answer
> > > a couple
> > > > of questions?
> > > >
> > > > 1. If there's no money to be made in (rotational trading of)
> > > ETF's, am I
> > > > correct when I assume that there's no money to be made in the
> > Rydex-
> > > like
> > > > funds that only mimic an index?
> > > >
> > >
> > > Rydex's funds are pretty much either index or sector oriented.
> > This
> > > is not the kind of thing I personally like to trade. But for
> > example
> > > if you have a system that trades SPX, NDX or RUT well or is
good
> at
> > > jumping on the sector that's likely to be hot next as opposed
to
> > the
> > > one that just was then it would certainly work in this scenario.
> > >
> > > > 2. Based on current rules and redemption penalties, which
> > families
> > > of
> > > > mutual funds can you recommend for rotational trading?
> > > >
> > >
> > > I don't personally trade on what one would consider to be a
> > > rotational basis. As I and Ken stated, erf's or the funds
> > management
> > > policies will eventually weed out most if not all the short
term
> > > traders, especially the ones with large dollars. So if you are
> > > looking to trade mf's with some sort of short term oriented
> > > rotational system as opposed to one that trades on an
> intermediate
> > > basis picking good candidates at the beginning of a market buy
> and
> > > for the most part holding them until a market sell then you are
> > going
> > > to find yourself pretty much limited to Rydex, ProFunds &
Potomac.
> > >
> > > > 3. If most (or all) such families of funds charge early
> > redemption
> > > fees, is
> > > > it safe to assume that you are trading these mid to long term?
> > > >
> > > > There's no sense in me working on a system that appears to do
> > well,
> > > only to
> > > > find that redemption fees are going to kill me. Or, is it
> > > possible that
> > > > there's enough money to be made that the fees are of little
> > > consequence?
> > > >
> > >
> > > Most do NOT yet charge erf's and as you can see from prior
posts
> > it's
> > > debatable as to whether or not they will and if so what the
> minimum
> > > holding periods will be to trigger those. For short term
> oriented
> > > traders adding a 1-2% erf in a 7-14 day period would be enough
to
> > > send them elsewhere or to a different methodology. What the
SEC
> or
> > > the fund companies themselves will do with this remains to be
> > seen.
> > > They really can't afford to be too outrageous with it as every
> > > 401k/IRA/VA account holder on the planet will be screaming
bloody
> > > murder.
> > >
> > > > Out of all of the above, I'm really interested in some
> > > recommendations on
> > > > mutual fund families to trade. I can then go do my own
> > > investigation as to
> > > > their fees, etc and devise my own systems that will work with
> > those
> > > fees.
> > > >
> > >
> > > I wouldn't think families as there is no real reason to just
like
> > > there is no real reason to arbitrarilly limit ones trading in
> > stocks
> > > to some specific group based on whatever.
> > >
> > > > Thanks
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