At time of writing, the share price of BetaShares Australian Equities Strong Bear Hedge Fund [ASX:BBOZ] is up 1.43%, trading at $8.52.
Since our last look at the BBOZ share price, the bear fund continued to lose ground as the ASX edged upwards.
You can see the S&P/ASX 200 [XJO] is struggling to punch through resistance at 6,000:
We look at the prospect of rise in the BBOZ share price going forward.
Many factors driving BBOZ share price
The US and Australian markets rallied off of the March lows, as vaccine hopes, recovery hopes and bargain hunting played their respective roles.
Now things seem to be on a knife-edge…
If a vaccine is found in the near future and markets go flying up in a burst of enthusiasm, you can expect the BBOZ share price to crater.
Conversely, if the immense stimulus pumped into the system unwinds in a financial crisis, BBOZ stands to benefit from more bad days on the market.
Outlook for BBOZ share price
In the grand arc of history, market crashes tend to be relatively brief.
If you look at the S&P/ASX 200 from the early ‘80s, the first major crash in 1987 resulted in sideways trading until the start of 1993.
The dotcom bubble bursting in the early 2000s barely registered, and the GFC resulted in a year-and-a-half of a downward trading.
You can see all of this below:
The conclusion that more bad days for the ASX are coming drives a lot of the interest in BBOZ.
The stimulus rolled out by major economies is now three times larger than that rolled out during the GFC, according to McKinsey.
As a result, there is a binary outlook for the BBOZ share price — depending on what kind of strategy you employ.
Either you are invested in a longer-term unwinding of the global financial system, or you’re a trader looking to capitalise on bouts of volatility.
In turn, the BBOZ share price may fail spectacularly or become a massive success.
Based on history, it appears there is little middle ground.
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