Trading The Short
The Truth Behind The Hype
There is a great deal of "hype" regarding aggressive market
timing, with timing services often advertising overinflated gains attained
by trading both bullish (long) positions and bearish (short) positions.
The truth is that market timers "can" make excellent gains
trading both sides of the market. But what no one tells you is that
it takes more discipline and patience than most timers are willing or
able to give.
Read on for the "truth behind the hype."
Natural Upward Bias
There is a natural upward bias in the stock market. That
bias results in long periods of gains, during which there are many short
but sharp corrections to the upward trend. These corrections often do
not last long and are "usually" impossible to profit from.
Often such corrections see most of their losses within the
first few days. In fact, the markets can go for months without a tradable
decline. Declines must be long enough and deep enough for market timers,
especially mutual fund market timers, to take advantage of them. Seldom
do the financial markets oblige.
The fact is; using bearish (bear fund) positions during
upward trending markets would often results in losses in those trades.
For this reason, Fibtimer typically moves to a cash position
when the markets are near their highs. Cash protects against further declines,
and does not lose money when the markets reverse back to the upside, as
they so often do.
If the upward trend is still intact, the markets will reverse
back up just as sharply. Often the resulting buying pressure causes traders
to quickly exit short positions causing fast reversal rallies.
It is hard on the emotions when these quick trades occur.
But aggressive timers who take both bullish and bearish trades are better
safeguarded by being in cash if the markets correct from their
Only when the stock market is in a long term decline or
a bear market does Fibtimer enter bear fund positions. In such conditions,
bear fund positions can create substantial profits.
Ranked #1 on TimerTrac.com
Bull & Bear
10 Year Results
Fibtimer Timing + 244.8 %
Fibtimer Timing + 57.2 %
nights as your investments are consumed
by a volatile Wall Street?
's trend trading services. Our trading
plans are unemotional and are always
invested with the trend, which
ever way it is headed.
's timing strategies MAKE
MONEY in BOTH advancing & declining
markets. No more sleepless nights.
No more upset stomachs.
We profit year after year after year. In fact, we have been
timing the markets successfully for over 25 years.
Join us and start
We are currently offering 2 or 3
months to new subscribers.
Special Offer - CLICK
Aggressive timers with a realistic time frame (several
years or more) will certainly see a correction that will
be long enough and deep enough to create substantial gains
by taking bearish positions.
If you want to use bear funds, you must have a long term
horizon, and be willing to wait for those big declines
(bear markets). This is just the reality of trading.
Bearish positions are riskier than bullish positions
because the markets trend higher for longer periods of
time than they decline.
We only use them when we are in a bear market.
Of course years 2000 through 2002 were bear market years
and the Bull & Bear Timer greatly outperformed all
the other strategies. The same thing occurred in 2008-2009
when we profited using bear funds.
Going For the Home Run
What market timers need to know is that there can be large
profits made during long term declines (bear markets).
But until we have a bear market, it is better to use cash
positions during sell signals to protect against loss,
yet not cause additional losses if the markets reverse
to the upside.
Bull and bear timers must be willing and able to stand
this test of time.
Market timers who trade both bullish and bearish positions
should "expect" that they will need to trade for several
years before using bear funds. It is not safe to use those
funds near market highs. The risk of losses is far too
Those who trade bearish positions are going for the "home
run." But you must recognize that home runs are not hit
every day. You may go a couple of years between them, or
If you feel you cannot stay the course for such a time
frame, use bullish only timing strategies like out S&P
Conservative Timer, which goes to cash during sell signals.
Don't be swept off your feet by hype and advertising.
Bull and bear strategies work, but timers who trade them
must be prepared to stay with them for long periods of
At FibTimer, even though we have been market timing since
1982 (online since 1996), our preference is to take bullish
positions. We trade our own accounts using the Diversified
Timing Portfolio which allocates only a limited amount
(20% maximum) to bearish positions.
Remember that Bearish positions should only be used in
very specific conditions.
Yes, bearish positions do result in large gains during
bear markets such as we experienced in 2000-2002 and 2008-2009,
but such declines are not everyday occurrences
Recent articles from the Fibtimer market timing services;
© Copyright, Market Timing Strategies, Inc.,
All Rights Reserved.
Fibtimer reports may not be redistributed without
Disclaimer: The financial markets are risky. Investing is
risky. Past performance does not guarantee future performance.
The foregoing has been prepared solely for informational
purposes and is not a solicitation, or an offer to buy or
sell any security. Opinions are based on historical research
and data believed reliable, but there is no guarantee that
future results will be profitable.