The US stock market has benefited from a global boom in assets resulting from increasing liquidity. During the past few years home equity withdrawals were responsible for a third of the the growth in M3. Since home prices are starting to fall and mortgage rates are increasing, mortgage equity withdrawals will soon plummet. This will cause liquidity to dry up and asset prices to correct. Although most stocks will fall, smaller companies which have thin margins and predominantly US-based operations will suffer the most. The UltraShort Russell2000 ProShares offers leverage to bears by doubling the inverse returns of the Russell 2000 index.
$65.38 (02/08/07)
