Taking a Market Beating? Try an Ultra Fund Investment

Let's face it - the market is in turmoil. Investors of all stripes have been blitzed. Our Washington, DC coaches, led by Paulson and Bernanke, have lost their clipboards. Congressional hearing committees, like so many half-time commentators, are pontificating but producing nothing but wind. Wall Street pros are stumbling around like an NFL quarterback being chased out of the pocket.  The coaches on the sidelines and their coordinators in the boxes (read TV talking heads) cannot even agree on the next signal to call.

The average investor, sitting in the end zone on the wrong end of the field, has taken a beating, not so much from the weather or the price of a hot dog and a beer, but from declines in his portfolio and from successive dividend cuts. This is especially true for those fans with a “buy and hold” mentality. They are not likely to see their portfolios recover for quite some time. After all, when a stock has lost 50% of its value, it has to double just to get back to even. And how many stocks increase by 100% in 24 months?

Now it is half-time - time to regroup and plan a new strategy. Given the volatility level of this market as measured by the VIX, which has reached a historic (maybe it should be “hysteric”) level, it might be prudent to consider using a bit of risk capital to re-build a portfolio and/or to augment monthly income.

We suggest using one of the ultra funds as a short-term trading vehicle; they move twice the value that an Index moves. We are partial to SDS (SDS), ProShares UltraShort S and P fund. It has served us well these past weeks, using the daily E-Zone System to place our trades.

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Though the weekly zones look wide, volatility seems to fill both sides, the Entry Zone and the Exit Zone. See chart for coming week and for past weeks.

Neither investors nor traders should expect to hear the final whistle of this game any time soon. It has at least two more quarters to play - and it might well go into overtime.

So consider the prudent use of some risk capital to do your rebuilding. It is never too late to start.