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Kent Thune

Best Time for Bear Market Funds

By February 4, 2013

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The best time to use bear market funds is usually about the time that no one else is thinking about them... such as right now. Of course your humble mutual funds guide would not suggest you bet against this bull market but it does make for interesting (or should I say alternative and contrarian) conversation!

Best Funds for the Worst Times

You always get your best ideas after the fact.  Think back to around the end of 2008 when your S&P 500 Index Fund had lost about 37% of its value. Had you bet against what should have appeared in 2007 as a huge credit bubble about to burst, you could have had 37% gains instead of 37% losses.

For example, Rydex Inverse S&P 500 Index Strategy (RYURX) had a 40.94% gain in 2008, which beat the S&P by 77.94%.

As you and I both know, this is purely hypothetical and bordering upon gambling. However, a prudent investor can use bear market funds in small increments for diversification purposes.

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