Crazy Pills on Wall Street
Over the past few weeks we’ve seen swine flu, a bankruptcy of Chrysler (not to mention an expected one from GM), a mountain of above-estimate – yet negative – earnings reports, the potential fallout of the commercial real-estate sector, and a pile of economic reports that all point to an economy going nowhere fast.
And yet the markets have marched upwards.
When the markets should have been more optimistic they were pessimistic, when they should have been very afraid they shrugged off the negative data and pushed on.
While its not a shocker that the markets aren’t rational, it does leave us to question if we’re being set up for a perfect storm of “sell in May and go away,” and one more “bottoming out.” We’ve got the ingredients for another serious setback to consumer confidence.
And just like the piano key necktie, no one seems to appreciate it.
For those of you that are just as concerned, you might want to take a look at Rydex 2x Inverse S&P 500 (NYSE: RSW). Or, if you’re feeling negative on financials, energy or health you can speculate specifically in those with Rydex’s sector inverse funds: RFN, REC and RHO.
It’s worth noting that 2x and 3x inverse funds include significant risk – above and beyond simple equities investing. These kinds of investments are not for the risk-adverse or the faint of heart.