Monday, February 16, 2009

Japan recession more severe than thought

Europe and Asia had a down day as we spent the holidays relaxing.

What will this bring for tomorrow? Not sure. But for the week it should be a wild ride.

With the stimulus passing, there should be much fanfare. How long it lasts will be the key. Most agree (at least in my circle) that this will not work. But then we have been wrong before. Once again if you are to nervous, stay in shrot term treasury money markets. If you want to take advantage of this, using options limits your risk while allowing you to take sides of the issue.

Here is a thought. Go long with 80% of your portfolio, and then buy 3x inverse ETF's for the balance, this should give you a pretty good hedge, then sell calls against the ETF and against the portfolio (hopefully your portfolio is in an index like SPY) this way you can gain premiums as the market swings back and forth.

Not what I would likely do, but it does make for some sense to those nervous.

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