2009-05-21

Shorts Killed Again....Updated

I went short on oil in my Best of Funds fund, and it crimped returns in the past month. Since adding PowerShares DB Crude Oil Double Short ETN (DTO) it is down 17 percent; it fell 11 percent yesterday.

Oil prices are up in recent days, to about $60 a barrel. I'm staying short because I do not believe there will be an economic recovery. If I am wrong, and prices do continue to rise, then we have an inflationary situation, in which case I am well-hedged in other commodities and precious metals.

Update: I posted this in the morning, but we've got a nice reversal today. The Best of Funds portfolio is invested for just this type of market. Though the hedges (such as short gold, versus gold miners) and large cash position have hurt returns (I don't sense a full on short opportunity yet), the fund is up 1.60 percent as of about 2:30pm, versus a 2.36 percent drop in the S&P 500, a difference of almost 4 percent.

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