Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
Nothing psychological about it from where I'm standing. He punched me in the nose. I read that, and promptly sold some today. I am not touching my HSTRX today though. I had initially bought equal parts of both and I considered it a single investment, and as such used to be my single largest investment in taxable account. It still is, but now with less of HSGFX. He was down same amount YTD when S&P 500 started selling off. Now S&P 500 has recovered, he is again down the same amount. Fully hedged? BULLS***.
Two problems. First, I think his back office stinks. Hedging is supposed to keep your portfolio level. True, options decay but even i can do a better job. This is not a boast. If I can do it in my brokerage IRA by simply purchasing inverse Profunds, WTF can't he? True he has to deal with investor redemptions and I do not, but then he is a professional with a PhD.
Second, if you observe how the fund behaves, it is essentially acting like a 1x inverse version of S&P 500 at best and 2x inverse version of S&P 500 at worse. So at any point you start regretting selling, buy an inverse Profund or Rydex fund. Moreover, let's say the S&P 500 tanks 50% from here, I don't see this fund returning 50%, because "market action" will prevent him from doing so. Besides, he is never supposed to be net short. So essentially, something is just broken here. The only way any investor will recover in HSGFX is if you have 1929 - 1932 period. Even in that event, outperforming S&P 500 and still losing money is nonsense. Again, if you are "worried" about Hussman being right, better of buying Inverse S&P 500 fund for same amount you have in HSGFX.
If i know what I know now earlier, I would advise you to take your 2% loss and run. I'm moving the proceeds from my current sale into TFSMX and TFSHX, both of which I have owned for longer. I expect HSGFX to be my tax loss candidate for the next couple of years. If I'm wrong, I will hardly cry.
Comments
Two problems. First, I think his back office stinks. Hedging is supposed to keep your portfolio level. True, options decay but even i can do a better job. This is not a boast. If I can do it in my brokerage IRA by simply purchasing inverse Profunds, WTF can't he? True he has to deal with investor redemptions and I do not, but then he is a professional with a PhD.
Second, if you observe how the fund behaves, it is essentially acting like a 1x inverse version of S&P 500 at best and 2x inverse version of S&P 500 at worse. So at any point you start regretting selling, buy an inverse Profund or Rydex fund. Moreover, let's say the S&P 500 tanks 50% from here, I don't see this fund returning 50%, because "market action" will prevent him from doing so. Besides, he is never supposed to be net short. So essentially, something is just broken here. The only way any investor will recover in HSGFX is if you have 1929 - 1932 period. Even in that event, outperforming S&P 500 and still losing money is nonsense. Again, if you are "worried" about Hussman being right, better of buying Inverse S&P 500 fund for same amount you have in HSGFX.
If i know what I know now earlier, I would advise you to take your 2% loss and run. I'm moving the proceeds from my current sale into TFSMX and TFSHX, both of which I have owned for longer. I expect HSGFX to be my tax loss candidate for the next couple of years. If I'm wrong, I will hardly cry.
Good luck to you, most sincerely.