Inflation

Haven't posted in a while. My trading has been pretty stagnant over the last couple months, minus a couple of short positions that I did okay with.

I did one S&P short (with SDS) that did really well. I did a QID that didn't work out well (shorting the QQQQ), and I'm currently shrot with SDS again. I had a nice rebound with ABB, and a few others, but in general, I'm still very neutral on everything.

My analysis: The fed injected a whole lot of capital, so we've gotten this little run up. The negative sentiment is still there on the mortgage crisis, inflation, etc... The fed can't afford to keep lowering rates, inflation is terrible highly correlated with never ending rise in oil. So how to play defense. So we may be in a little bit of an up run here, that will eventually peter out. If companies start reporting flat earnings growth, we'll see a long period of either slow decent of the markets, or rapid correction.

My feeling is that the fed will be forced to raise rates because of inflation, and without there being any real economic recovery the market will tank. Yup doomsday is ahead of us. If I were to bet, and I do bet.... I think we still might see a 10-20% correction in equity markets. The when part of that is kind tough

Of course, I could be wrong, inflation could just inflate the price of equities. So subtract inflation from those numbers, and things aren't so bad, but the overall index is worth a whole lot less.

Where to go... PST and TBT are double inverse ETF's of the IEF & TLT. Essentially a way to bet that rates will go up... and it pays interest. I'll have to check with kind of interest it pays, but I dont' think there will be much more upside in the TLT or IEF in the long run. However this is probably too safe a bet for an aggressive portfolio.