by FoxV » Thu 31 Jul 2008, 11:16:36
The ultra short shares can be a pretty wild ride. Definitely not for the faint of heart. Keep in mind though that you're betting on the downfall of the US banking system. To say you're betting against the house is an understatement. Just when the world seems its going to come to an end and these funds will look like they'll shoot to the moon, Bernanke will come out speak some gibberish and the ultra shorts will crash.
There's also a little matter of the government making step towards banning shorting all together (which usually happens as a country moves towards socialism/fascism)
The other thing to consider, and the main reason I abandoned the Ultra shorts, is that they're loaded up on leverage and derivatives, both of which give them they're (fictitious) 2X values. In todays environment that means there are huge third party risks that the funds could be shutdown and worth 0.
at the end of the day its a crap shoot, but always remember "The longer you play, the more you'll lose"