There are a lot of nasty catalysts on the horizon: Stress test results next week, car companies going bankrupt, and more. Plus, the S&P 500 has run about 28% from March lows. I bought back into Grizzly Short Fund (MUTF:GRZZX) on Friday. If you don't have the cash for a hedge fund, Grizzly provides an easy way to purchase a diversified basket of shorts, managed by a team of professionals.
I think all investors should have some exposure to short equities. A short mutual fund can be a good choice. It’s insurance for bad times. When the economy gets whalloped, stocks go down. You might lose your job. But with exposure to shorts, you have an extra cushion. If things are bleak, and you need cash, sell the short fund. Voila, some extra cash in your pocket just when you need it most.
I like short funds because I don't have time to monitor my portfolio all day. I do own some individual shorts, but just a few. My portfolio isn't big enough to justify round-the-clock attention, anyway. Hopefully one day it will be large enough to warrant nurturing like that.
Prudent Bear is another good fund. It's long-short, with the majority being short. They also own some gold miners. But I'm looking for more of a pure play right now, so I chose GRZZX. I sold my Prudent Bear back in March, which proved to be lucky timing. But I'm not buying any for now.
If you want more details, I did a longer writeup of these two bear funds in January. All the long-term data is a few months old, but the information on their management teams and investment philosophies should be up-to-date.
Disclaimer: This is NOT investment advice. Always talk to a professional when making investment decisions. Disclosure: Long Grizzly Bear Fund. I have no affiliation with either of the mutual fund companies mentioned, and have not received any compensation from them.