David Schrader

Seeking Alpha in 2008 With ProShares' UltraShort S&P500 ETF

It got sent while I was typing... haha all apologies.

S&P (-7.65%) these figures according to money.cnn.com 2:15pm, 01/29


That would make you right so far but the Russell has come down from a high of 856 to 702 (-21.4% from its high). The S&P, over the same period, has gone from a high of 1576 to 1356 (-14% from its high). Therefore the R2000 has already been punished and as you stated it's been priced in.

However the impact on a global scale is yet unknown which means Mr Market has been unable to fully price in the negative impact of a US slowdown on internationally-linked companies such as those you mention in the S&P. That's why the R2000 will rebound stronger and more rapidly than the S&P - while the players are still figuring out the S&P impact they'll already know the R2000 impact.

Seeking Alpha in 2008 With ProShares' UltraShort S&P500 ETF

Jo Shmo

Thanks for the complement. As you said, keep in mind the market is priced for the future not the present. You're right - on a logical basis small caps should be hurt more from a recession/slow down. However the market is not a logical man, it's an emotional child. Based on the performance of the S&P for the month of January relative to the

YTD Russell ( - 8.28% )
YTD S&P

Seeking Alpha in 2008 With ProShares' UltraShort S&P500 ETF

My movie reference is wrong.... it should be "Passenger 57", not "Blade"

Seeking Alpha in 2008 With ProShares' UltraShort S&P500 ETF

One would think so. However as we've all experienced a stock and its company don't necessarily move in tandem. I expect small cap stocks to perform better than large cap for 1H 2008, even if the small cap companies are doing worse.