Roland Francis wrote:
> For the short term, taking your own advice, one could short-sell
> investments whose underlying security is real estate. Your own example
> of ETFs would fit the bill.
Roland,
First of all, I am glad that you can see quite clearly that the prices of real
estate is collapsing, especially in the depressed parts of the US.
Secondly, I have been looking for months for an ETF, an inverse ETF or even an
"ultra" ETF that tracks the real estate sectors in the US. If you can point one
out to me, I will be eternally grateful to you.
> In the long term when prices are collapsing you are buying low. All
> you have to do is hold until you can sell high.
Which may take a life time (or two) when real estate is concerned.
Then there always is "opportunity costs" i.e. you could use the same money to
trade and make more (in this lifetime) than tying it up in real estate which
may take forever to sell at a profit.
> PS. I strongly advise any investor experienced or otherwise, not to
> contemplate leveraging strategies like short selling which are highly
> dangerous and are best left to certified portfolio managers,
> investment counsel and people with money to burn.
We are in agreement again.
I too would strongly advise all novices i.e. anyone with less than five years
experience in the market from using short selling strategies. The danger is:
1) When you short sell say, one thousand shares of a stock that trades at $10,
the best thing that can happen is that the company goes bankrupt. The shares
will then trade at $0.00 and you make a $10 profit for every share you shorted.
2) The flip side to this is, if you are wrong, there is no limit to how high a
stock price can go. For example, the share price of the one thousand shares
that you shorted at $10 can go up to $100. If you have to buy the shares back,
you have to pay $100,000 for the same shares you sold at $10,000. When this
happens to stock brokers, they start jumping out of windows.....
Shorting is not for beginners or those with hard earned money. Thankfully, the
brokers will block people from shorting by requiring novices to open margin
accounts. In this way, the brokerage house makes sure it gets its money
regardless of how inept its client is.
Finally, 'investing' in hedge funds is as dangerous as shorting stocks. Hedge
funds take extra-ordinary risks to make extra-ordinary profits. I have seen
brokers from hedge funds smooth talking their funds to those with money. The
'investors' are not aware of the risks they are taking. Strangely enough, it is
always the professionals that buy into these funds. One only becomes aware that
these professionals have lost money when they start asking, at social
gatherings, how the hedge fund system works.
Folks, make sure you ask all the questions BEFORE you invest.
Mervyn3.0
"If you want to feel rich, just count the things you have that money can't buy”
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