This was brought up in the comments, and I’d like to discuss this topic separately. In my opinion, it makes sense to only short both long and short ETFs. The way they’re structured, both long and short ones have a high “leak” rate due to the daily rebalancing and expense fees. By always being on the short side, you win just a little bit more. So for example, if you want to…

  • long financials -> short SKF
  • short financials -> short UYG
  • long commercial RE -> short SRS
  • short RE -> short IYR, etc. etc.

Some visuals to back up my strategy…

Reading these figures, I can’t help but think that it’s “each man for himself” in this world.

All figures are for one year:

  • Basic education for all the people in the world would cost $6 BILLION
  • Installation of water and sanitation for all would cost $9 BILLION
  • Basic health care and nutrition would cost $13 BILLION

Total: $40 Billion annually

  • $8 BILLION is spent annually for cosmetics in the United States alone
  • $11 BILLION is spent annually on ice cream in Europe
  • $12 BILLION a year is spent on perfumes in Europe and the U.S
  • $17 BILLION a year is spent on pet food in Europe and the U.S
  • $35 BILLION is spent on business entertainment in Japan
  • $50 BILLION on cigarettes in Europe
  • $105 BILLION on alcoholic drinks in Europe
  • $400 BILLION on narcotic drugs around the world
  • And finally, in ONE year alone $780 BILLION is spent on firearms and munitions (I suspect this number is now higher)

(This, right here, is a list of economic sectors to invest in if you’re inclined to do so.)

In the past, industries whose profitability rose 12 months following the rise in the US dollar were:

  1. pharmaceuticals
  2. food products
  3. insurance
  4. household products
  5. commercial banks
  6. tobacco companies

These are consumer driven industries……

All of the major commodities trade in US dollars. If the US dollar is rising you can bet that the global price of commodities is falling. This fact is often overlooked when investors try to find reason for share value declines. Crude oil and gold have recently fallen from record highs. These drops correlate directly with the rise in the US dollar. We are in the heat of the American economic slowdown. As the ripple effect from the sub prime fiasco continues to expand, we urge all of you to remember the following statement: The United States fell first and fell the hardest. The world will look to them to rebound just as strong and just as fast.

Photo credit: Jayel Aheram

The Perpetual War Portfolio is an evenly weighted basket of five stocks poised to succeed in the age of perpetual war. The stocks were selected on the basis of popular product lines, strong political connections and lobbying efforts, and paid-for access to key Congressional decision-makers.

For awhile there I wanted to buy the VICE fund (booze, gambling, military, cigarettes), but it’s only open to the U.S. citizens. I’m glad. I would only feel okay investing into alcohol 🙂

Questrade Democratic Pricing - 1 cent per share, $4.95 min / $9.95 max

Suppose you found a junior minor that you think is a hidden gem and its share price is just so ridiculously low that it can’t get any lower. Time to buy! Or is it?

If the company on your radar is:

  • about to start building the mine, or
  • in the process of building the mine, or
  • in production but in very early stages and may be having cash flow problems

…before you invest, you need to find out:

  • the company’s “burn rate”, or how much money it needs to spend per month
  • how much money they have in the bank
  • if any big capital expenditures are planned and for when

All of this is not insider information, it’s open to the public, just go through the quarterly statements. For the latest facts you should email the company’s Investor Relations department (that’s another thing – email them and see how quickly they respond. Some juniors never replied to my repeat messages and that was the final straw in some of the decisions I made.)

The point of the above exercise is to try and time buying on the dip. When you know how much money they have and how much they spend, you can figure out when they’ll be needing financing. Before the financing share price is usually manipulated down (by the “smart money” that provides the financing), so that the offering can be made at the lowest price possible.

Private placement shares usually can’t be sold for several months (4 to 6 is typical). You can look forward to that time, because the PP investor will likely want to dump the shares for more than they paid, and if they had the ability to depress the share price, you can be sure they can manipulate it higher, too.

Juniors are much more driven by company events/news releases than by technicals. It’s just the nature of this beast. Technical analysis works for juniors in the relatively stable periods when no new announcements are expected – but only if the trading volume is sufficient.

Questrade Democratic Pricing - 1 cent per share, $4.95 min / $9.95 max