Warning... SRS and Inverse ETFs

By Denise McCosh
December 7, 2008

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I am noticing that the big institutional investors are moving out of the inverse ETF's, especially the SRS. We need to watch this carefully, as you can not swim against this tide. I would hold off investing in these inverse ETF's until we understand the flow of funds movement better.

It will be an interesting week, will the temporary market rally continue or will the market resume it's descent?

The movement by the institutional investors suggest that the rally will continue; if so, this will be a great last chance to get out of your losing equities and mutual funds before the bear market decline resumes.

If the market rally fails, I would get out of equities/mutual funds asap, and move into the short positions such as the inverse ETF's.

If you are looking for something to invest in, you may want to consider the UUP - bullish dollar, or put options on the FXE - bearish Euro.