"Invest, and then Investigate."

[Arindam]

Back in his younger days, before he became a political meddler and was just a shrewd, savvy trader, Soros used to say, “Invest, and then Investigate”, a bit of wisdom that is echoed in the saying, “If you want to know how the ponies are going to run, you gotta place your bet,” which is echoed by Talib’s insistence on “skin in the game”.

All of that is preface to this. There are roughly 218 mutual funds that have $100 (or less) initial investment mins AND no ST redemption fees. Some are leveraged. Some are inverses. Some cover the usual ‘style-cap’ nonsense. But some cover the major US equity indexes, the key industry sectors, the $US dollar, and a few countries. In short, with them, it’s possible to make bets on pretty much everything that needs betting on. I ran a scan just now, and nothing popped up as a timely buy. But that doesn’t mean I’m not going launch my campaign this Monday anyway, and one of the funds I’m looking at is RYMFX.

Standard Caveats: If you’ve already got an investment plan in place and don’t need distractions, then ignore this thread. But mutual funds are so retro that they interest me, and I’m going to see if I can’t make some money with them using HA Smoothie. Also, 218 funds is too many to hand-chart. So I need to cut the list down hugely to just a manageable few. So that’s where some of the rest of my weekend goes. As always, if you’re inclined to tag along, do your due-diligence. Pull prospectuses and fact sheets. Chart what you buy before you buy. Set cut-loss points, etc. You know the drill.

Arindam

[Arindam]

ProFunds offers 17 ‘style-cap’ funds based on US equities. But only the 6 leveraged ones would need to be tracked. (IMHO, 'natch.)

Even better, given the high correlations among them, four more funds could be discarded, so that bets would be made using only the large-cap or the mid-cap or the small-cap pair.

Here’s those same facts done graphically with overlays.

Frankly, I’d opt for either the mid-cap (based on the SP400) or the small cap pair (based on the Russell 2000), given how screwed up the large-cap index (based on the SP500) has become due to its cap weighting and the fact that just 8 stocks create 25% of price movement and that if one really wants to bet on tech, then TEPIX, INPIX, WCPIX, or TCPIX (all to be discussed later) are more direct ways to do that.

Can’t decide whether to go with UMPIX or UAPIX? Pull their sector weighting. The midcap index favors real estate and underweights healthcare compared the small cap index, which I think is the wrong bet to be making. But, ‘Chef’s Choice’.

So, whack, whack whack. Instead of 17 funds to track, just 2 would give most of the “juice”. Now on to whittling down the other 201 to a more manageable 20 or 30 total, or no more than could be hand-charting before eyes glaze over.

ProFunds offers leveraged, long/short pairs for the NAZ 100 and the Dow 30. I’d favor UOPIX over UDPIX. But, Chef’s Choice.

ProFunds offers leveraged, long/short pairs for Latin America, China, Japan, Internationals, Emerging markets, and a 1x long for Europe. China is the ‘elephant in the room’ that can’t be ignored, and I’ve got a soft spot in my heart for LatAm. So, those are two I’d keep. But UJPIX and UUPIX chart so well, I’d keep them, too, dropping only Internationals and Europe.

[physician]

The Russell 2000 index of smaller companies seems to be doing quite well and might be a good place to start. I have a service that has suggested the ETF for the Russell 2000 for me…doc