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3 Responses to 'With the market at an all time high, are bear market funds a good investment?'

1. tcmac853 - November 16th, 2008 at 10:16 pm

   If I had a crystal ball I would bit sitting on an island somewhere drinking a pina colada. The direction of the market is always uncertain in the short-term. It only becomes clear when you extend your time horizon out over the long-term.

   No one can argue that long-term investors, investors who think like an owner rather than a stock trader, have accumulated far more wealth.

   With that said, it depends on the size of your portfolio whether or not you should have defensive investments. In doing so, you should always maintain a small position – perhaps 10% +/- a small variance during different market cycles- as a hedge regardless of market highs. This is not including the balance you should have by owning bonds, as well.

   Much of this depends on your age, assets, goals and there is no blanket answer to your questions. However, a professional money manager can offer you proper guidance that will better direct you to investment success through bull and bear markets.

   It has been since 2001 since we’ve had a recession. Expansions have been lasting longer, however, so no one can accurately predict when the economy is going to contract. Another terrorist attack, global financial crisis, geo-political problems, and a whole host of surprises could trigger a market drop.

   Short of having a crystal ball, maintain a properly balanced portfolio appropriately aligned with your needs, goals and risk tolerance and you will weather market storms better than chasing bulls and bears.

2. kzajko - November 18th, 2008 at 12:15 am

   I make it short: I dont think shorting the bull market is a good idea. Its actually very bed one. You never know where the top is. Now looks we have a top and some people short but next year we can have higher top etc etc. My point ? Short when you see that market is weak not strong like now.

3. Matthew S - November 19th, 2008 at 8:30 am

   IMO the market still has plenty of room to grow. If you look at the S&P 500, a much better indicator then the DOW the P/E ratios are very inexpensive relative to both history as well as to bond spreads. My general philosophy is that stock prices follow earnings, and earnings are still doing quite well as a whole. We are no where near the ridiculous P/E ratios of 2000. As a whole the equit market is very reasonably priced. So I think there is still some growing room. Or course there will be hick ups along the way. Maybe a correction or two, but I think the market is heading higher near term.

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