Sell the Dow. Buy the S&P.


No. No. No.  That’s not what we mean at all, if you know what we mean.  But oftimes the meaning of meaning can be obscure, as Wittgenstein noted.

What we mean is this.  After a forty year love affair with the Dow we’re moving on to faster company.  Ta-da.  The S&P 500.

We have been fretting about the performance disparity between the two for some time.  The SPX is up 56.3% and the INDU is up 48.5%.  While we will continue to work with the Dow henceforth the bulk of our investments will be in the leveraged SPX ETFs:  SSO, (2x bull), SDS (2x bear), UPRO (3x bull), SPXU (3x bear).  Dow leveraged ETFs (3x), FSX (bull), FAZ bear.

Note, that like all things in this newsletter we do not recommend these (or anything else we comment on here).  Every reader must make his own decision as to how much leverage to use.  Relaxed long term investors may prefer to stay with the DIA and SPY.

Here is the difference leverage makes.  A guy like SPY hits you in the face and it hurts some.  A guy like UPRO hits you in the face it breaks your nose.

In addition chasing performance often results in getting hit in the face by somebody.

Now that this boxing lesson is over you should go back and read our letters on why you should be long the Dow. (S&P)

We will be buying again when the nearby highs are taken out.

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