Bargains at McDonald's

This morning, on a whim, I stopped for an early lunch at McDonalds (MCD).  I ordered two regular hamburgers and an iced coffee -- hazelnut, my favorite.   The charge? $3.17!  I looked at the receipt.  I was charged $.99 for the two  hamburgers and $1.99 for the coffee.

I started thinking about that.  Why would McDonald's only charge me $.49 for a hamburger?  That is about the same price I paid in St. Louis over 25 years ago.

The iced coffee I could understand.  You can get Starbucks type beverages for less -- a good way to get "prestige" on the cheap.  Of course the atmosphere isn't quite the same.

But, that $.49  hamburger?  After studying the posted prices over the counter I finally found, in small print near the bottom,  the regular hamburger price. It was marked $.69!  Well, that only deepened the mystery.  Why would they only charge me $.49?  Some kind of senior discount maybe?  I'm 60.  The sales clerk did not ask my age and I could find no promotion advertising a hamburgers or senior specials.

Times are tough,  If people can get 2 hamburgers for $.99 and skip the drink this would be a great way of getting meals on the cheap.  I'm not sure this stuff is good for you but it is cheap!

For what its worth: at the next table two teenage girls were splitting what looked like a large order of fries and a medium drink.  Apparently McDonalds is doing well with this type of stuff.

ETFs for Bear Markets

The dollar keeps falling while "real" assets such as gold, oil, and equities continue to march ever upward.  Its great to go along for the ride but keep in mind that "all good things must come to an end someday".  Sometimes a violent end! When the tide turns ... and you know it will ... how can you position yourself?

Just about anyone with an elementary school education can make money when equities, commodities and bonds all go up at the same time.  However, investments that do well when things go the other way are much harder to find.  Here are some ideas on how to hold your own, if not profit.

First, get into a healthy cash position, then consider these ETFs.  Most did well or at least held their own in the 2008 bear market.  Two are currency ETFs.  Currency markets are much larger and independent of equity markets.

1. UUP  Yes, the much maligned US dollar.  Just how low can it go?  Well, don't answer that question, but do consider that UUP was probably the best performing ETF in the second half of 2008.
2. CYB  The Chinese yuan.  This is an interesting play.  Currently the yuan is pegged to the US dollar but any change will most likely have the yuan appreciating versus the dollar.  Note that the yuan mostly held its own during the second half of 2008.  China is also printing money but doesn't have the deficit problems the US does.
3. TIP and BND  TIP invests in inflation protected US bonds and did not do well the second half of 2008.   However, if you see a stagflation scenario ahead TIP may be a good place to be. BND tracks a "broad, market weighed index" of bonds and except for a violent but brief spike down in September, when everyone was panicking, held its own throughout 2008.
4. DOG, SH, PSQ and RWM.  These inverse ETFs are a convenient way for investors to "short" the market and a great place to be in falling markets.  But, remember these ETFs are subject to tracking error and values decay over periods of time.  Also, see the comment about "bear" ETFs below.
5. GLD  Gold is commonly thought of as an inflation hedge.  Yet, more than anything, it is a store of value in uncertain times.  If you see greater than normal financial and social unrest ahead -- and most of us do -- you may want some gold investments.

If you are a day trader you can see a list of Yahoo Finance's "bear" ETFs here. Remember, most if not all, of these are for day traders only because of daily rebalancing.  Held long term, they not only can, but will, destroy your portfolio.  Click the "Return (Mkt)" tab on the Yahoo site to view the "Red Sea" of three year returns, losses run up to 70, 80, even 90 percent.  Only one, UDN, shows a positive three year return -- wonder why?

So, when will the equity-commodity-bond market run end?  Consider these potential early warning signs:  long term treasury rates start rising, the Fed is really ending Quantitative Easing, and an improving US economy which may cause the US Federal Reserve to raise rates.  For now the "herd" is jumping on the band wagon -- and more are boarding every day --  so enjoy the party.  But, be ready to jump when the music gets out of tune and the wagon starts swaying.

Disclosure:  I have a small "precautionary" position in SH