Wednesday, January 23, 2008

Chasing The Bear

I've decided to put a little more money behind my forecasts for a deeper Bear.

I have sold out the balance of my mutual funds that are stock market based. I'm completely out of the TSX Comp Index Fund and the Royal Bank Dividend Fund. I can't recall for sure why I kept the remaining units of these funds this long. It was probably part oversight and part concern for selling mutual funds within the 3 month minimum holding period. I took a loss of a few thousand but if I'm right I will easily make this back later when I buy back in at significantly lower levels. A good trader has to be cold-blooded about these things.

I am also going one step further. I have also placed an order for some Horizons BetaPro Bear Fund (HXD) that shorts the TSX 60 Index. I'm currently trying to guess the extent of the current short-term bear rally so I can get it at a little better price. Its at $23.50 and I'm offering $22.85. I know I'm unlikely to call the exact bottom but its fun to try. Its a little confusing with the index going up and HXD going down.

HXD trades just like a stock and its great being able to short the TSX market with such convenience. I think the last time I went short was when the airlines were in a nosedive after 9/11 and I made a little money on Air Canada's tailspin.

I can never predict whether the TSX's next move will be due to energy, mining or financials or some other stocks. By focusing on the entire market I don't have to try and guess the details. The truth is I don't care. I view the market as just a possible way of making a profit.

Changing the topic a little...I took this picture of a Buffalo/Bison bull yesterday. It was a nice change of pace. I have to say that I refrained from touching him. He must have weighed 2000 pounds.

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