Junk bonds look tempting, haven’t dipped my toe in yet though… Thanks for the food for thought though.

Bearish’s last blog post..Main Street Fears Flood of Idiots from Wall St.

- It is true that longer term, 2x ultrashort or ultra-long ETF’s can vastly underperform their counterparts on a straight 1-1 basis, that’s the risk involved, and why you should have a quick trigger finger for buying and selling.

It is obvious that treasuries will be coming down, the questions is when.

We can play that market ahead of time, and even if we get the timing wrong, we can make up the difference so to speak, via the ultrashort model.

- This is a good question, I got those stats from a trusted friend of mine who is in the investment community, I guess I should have asked him what he meant by that, and looked at it more closely as it doesn’t make mathematical sense at first glance, but he is such a smart man, I know he meant something intelligent and comprehensive by it.

My guess is that he was talking about the underlying assets within the last junk bond ETF…since they are already being sold for $.30 on the dollar in aggregate, if some went to 0, since others were higher in the holdings, you would net-net come out about even because they are being prices so ridiculously low in relation to the underlying assets, and the high yield and dividend.

- 2x short ETF: I am skeptical of these ultrashort ETF’s usefulness as a shorting tool over the medium-long term. Since they reflect daily price movements of the underlying basket of stocks, their stated performance (namely -2x) only holds for short-term fluctuations. For example, see UYG vs. SKF (2x and -2x financials)

- junk bonds: can you elaborate on how you come up with your estimate of “if you invest 10% or so of your money in the last ETF, even if most of the holdings go to 0, and you get $.30 on the dollar, you still break even on the investment”?

Thanks,