Long Gold, Short S&Ps is Where You’ll Want to Be

by Rick Ackerman

[The following analysis is from my mentor, Ira Tunik, who always considers the big picture, even as he trades mostly soon-to-expire puts and calls aggressively.] Although I am not a gold bug and haven’t followed bullion for several years, I found it interesting that for most of the last decade, gold has been the best performer of all the indexes. If gold’s weakness since 2011 is merely a retracement, then the next bull leg could be huge. I looked at this chart while doing comparisons as I start to build another portfolio of long-term stock and option positions. I am also looking to see which index has the farthest to fall when things start to unravel. This chart suggests that if you want to be short in a bear market, the E-Mini S&Ps will be the best vehicle. This seems logical because the E-Mini S&P is the investment world’s hedge of choice against long stock positions that are very difficult to get out of. They beta-weight their portfolios against the E-Mini S&P, then delta-adjust their positions.

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