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Betting on the Bear

Take advantage of slumping stock prices.

This story appears in the August 2001 issue of Entrepreneur. Subscribe »

If you think there's no place to hide during down markets, you're not thinking strategically. Four funds from Rydex Global Investors made banking firm Lipper & Co.'s top-performing list during the first quarter of 2001. The funds-Arktos (Greek for "bear"), Tempest 500, Ursa (Latin for "bear") and Venture 100-tore the stuffing out of other equity funds' performances, thanks to their short-selling strategy.

A short investment strategy means portfolio managers sell borrowed stock and then buy it back at a later date, hopefully at lower prices. "When you have a short position, your interests are contrary to that of the market," explains Chuck Tennes, of Rydex. "When the market [goes] down, you're able to make more money because you'll be able to return those shares at a lower price."

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