What to do now
While I am still keen to take advantage of the current opportunity I am not confident in my ability to pick the winners. While I am confident I can pick some good stocks, which will do well, I am not confident that I can outperform the major indexes over the coming year.
What sectors are likely to recover first?
Would buying an ultra bull fund be sensible? For example ULPIX. A return to September prices would see a double. A 100% return.
| Years | CAGR |
| 1 | 100% |
| 2 | 41% |
| 3 | 26% |
| 4 | 19% |
| 5 | 15% |
Taking a slightly longer perspective. What are the returns for holding until the indexes once again hit new highs. The UltraBull ProFund peaked at over $80 it is currently $25.44.
| Years | CAGR |
| 1 | 215% |
| 3 | 47% |
| 5 | 26% |
| 7 | 18% |
| 9 | 14% |
Many people are suggesting energy plays. I believe energy and mining carry high risk and despite the current falls could fall a lot further despite the strengthening of the USD protecting profits of BHP and Rio.
Others are suggesting companies with some leverage as they have been unfairly beaten down and have greater rebound potential. The company I know the best which falls into this category is SunTech, STP, which is now very cheap and if I was to remain disciplined I would buy. People unfairly lump in it with other overpriced solar stocks like FSLR.
My feeling is the time has come for me to start averaging into the UltraBull ProFund. [Update: Ultra funds are only good for short term trades. DO NOT use ultra funds for long term investing]
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