Went Short During Cut

I went short by buying the SDS Short Fund about 2 hours before the announcement. I had a feeling they wouldn't cut because I didn't want them to cater to market expectations. But, they did cut rates on par with what the market was expecting and everything sold off. Which doesn't quite surprise me as we already had the "cut rate rally" before the announcement so now that we know the fed did what we wanted, the rally isn't there anymore. Expectations have been met.

 

Anyway, I got in at 49.92 I told a couple people I was going short and everyone laughed at me so I knew I was doing the right thing. I sold out at 50.44 and SDS continues to climb as I'm writing this. Just under 50.80. It's really volatile though huge jumps and then comes back down. But I'm happy with my decision.

 

Rate Cut- Yes or No?

The case for a rate cut:

-The global credit system still needs help

-Problems in the housing and real-estate industries are spreading into the broader economy

-The broader economy is slowing down

-Lenders need time to understand how bad their problems are

 

Why the Feds shouldn't cut rates:

-It would bail out the stupid's :)

-It would boost inflation

-The U.S. economy isn't that weak

-Some financial pain is necessary

 

For an in depth view of each point, check out the MSN money article