Illusional Delusion

What to Short When the Rally Dies

I played with FAZ and unfortunately got into the short side a bit too early. I am even at the moment and looking to go on some safe longs with my current shorts as hedges. I think the 1x ETFs are decent based on what I saw in the price movements. Unless you are doing swing trading, or a very convicted bull/bear, even for short term, I recommend you stay out of leveraged etfs. Well, if you have anything less than an iron stomach, stay away from levered etfs. 1x won't make you much money but at least you are hedged. There is too much intervention to know when the rally will start or end. For all you know, the magic carpet might appear or disappear right under your feet.

ProShares Short ETF Short-Term Capital Gains Distributions

I'm not sure how this is going to matter much. I happen to have bought SRS in December (any time before that would have been much worse) so accounting for the wash sale rule, I will be taking the loss into 2009 either way unless I close my positions, which opens the gate for me to miss out on the upside of the position that I have taken. Given that most holders believe that there is still sizeable downside risk in the economy, the odds of losing out on the position's upside is a much bigger loss than the dividend's tax. Personally, I'm a small investor, so unless people are talking millions here, maybe I'm missing something...