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Thread: XL-entLady's Account

  1. #11

    Join Date
    Dec 2007
    Posts
    906

    Default Re: XL-entLady's Account

    I think we are learning more from you Lady. Your research and posted info have been excellent. Thanks!
    -- Tom | My Trades

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  3. #12

    Join Date
    Feb 2009
    Posts
    654

    Default Re: XL-entLady's Account

    You're welcome.

    Lady
    If you think education is expensive, try ignorance. - Derek Bok

  4.  
  5. #13

    Join Date
    Feb 2009
    Location
    Pacific Northwest
    Posts
    149

    Default Re: XL-entLady's Account

    Quote Originally Posted by XL-entLady View Post
    ROFL! After dealing with TurboTax all day that one was a real gut-buster!

    I was wondering how we were going to do the account reporting.... I'll think about it in my next 3 AM board meeting* and see if I can come up with any suggestions - maybe some kind of XL spreadsheet.

    Lady

    *3 AM Board Meeting: those middle of the night times when you can't sleep so you lie there having a board meeting with all the voices in your head.
    I managed to complete mine and file yesterday. Today we got the accepted e-mail so only 8-14 working days and the government will be paying me back that interest free loan I gave them last year.

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  7. #14

    Join Date
    Feb 2009
    Posts
    654

    Default Re: XL-entLady's Account

    My core positions are:

    GDX, because that is where the bull market is right now;
    SLV, because if a precious metal has more room to run it's silver; and
    MOO, as much because I love the symbol as because we're selling fertilizer to China.

    This morning I sold everything else I had and threw it all into SRS with a tight trailing stop. So far it's working okay. We'll see how I feel about this trade at the end of the day ....

    Lady
    If you think education is expensive, try ignorance. - Derek Bok

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  9. #15

    Join Date
    Feb 2009
    Posts
    654

    Default Re: XL-entLady's Account

    Well, my trailing stop on SRS just triggered. I bought it at $64.95 with a 3% trailing stop and I sold at $66.08. Probably should have set my stop tighter, but I made a fair sum and I'm happy.

    Also took an intermediate position in XBI, the biotech SPDR, just now.

    Lady
    If you think education is expensive, try ignorance. - Derek Bok

  10.  
  11. #16

    Join Date
    Dec 2007
    Posts
    906

    Default Re: XL-entLady's Account

    Nice job!
    -- Tom | My Trades

  12.  
  13. #17

    Join Date
    Feb 2009
    Posts
    654

    Default Re: XL-entLady's Account

    I just bought some XLF at $8.08. I know, I know .... But I'm hoping for a rebound tomorrow. We'll see if I hate this trade!

    Lady
    If you think education is expensive, try ignorance. - Derek Bok

  14.  
  15. #18

    Join Date
    Feb 2009
    Posts
    654

    Default Re: XL-entLady's Account

    While I was messing around trying to find out more about the GOE ETN today it just kept going up. It closed up 99.4% today.

    Woulda, shoulda, coulda.

    Lady
    If you think education is expensive, try ignorance. - Derek Bok


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  17. #19

    Join Date
    Dec 2007
    Posts
    906

    Default Re: XL-entLady's Account

    What the? If it can just do that everyday, we can retire next week. (Not that I own any)
    -- Tom | My Trades

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  19. #20

    Join Date
    Feb 2009
    Posts
    654

    Default ETN Risk Rears Its Ugly Head

    I started wondering more about ETNs after what the GOE ETN did this week. And I found this article that explains it. Not sure where else to put it, so I'm hoping that if I post it here people can find it by searching on the word "ETN" if they're looking.

    http://news.morningstar.com/articlen...aspx?id=272009

    Our New ETN Outlook 01-22-09

    "Just last week, I titled an article "ETN Risk Rears Its Ugly Head." If only I had known that I would want to reuse that title so soon. Bank stocks are plummeting once again, but this time three particular banks concern our ETF team:
    Deutsche Bank (DBDB),
    Barclays (BCSBCS), and
    State Street (STTSTT). My colleague Paul Justice already addressed the concerns of investors in SPDRs and iShares ETFs in his article on Tuesday, but I wish to expand upon the implications of the recent market movements for investors in ETNs such as the iPath series or the PowerShares commodities ETNs, backed by Barclays and Deutsche Bank, respectively.

    For those who have not read Paul's article, it says, in short, that ETF shareholders do not need to worry even if the bank managing their funds goes under. Exchange-traded funds, like traditional open-end mutual funds, are legally set up as trusts separate from the bank corporations. The assets within these trusts cannot be touched during bankruptcy proceedings, as they belong wholly to the shareholders of the fund. We also remain unconcerned that bankruptcy might disrupt the ETF management, hurting the funds' index tracking. Not only do companies generally remain operating through bankruptcy proceedings in order to unwind their businesses in an orderly fashion, but the asset-management side of these banks (Barclays Global Investors and State Street Global Advisors) would be among the most sought-after acquisitions in any post-bankruptcy asset sales. In the worst-case scenario, the parent company may change, but the SPDRs and iShares funds are simply too valuable for potential owners to risk capital flight through poor management.

    Investors in ETNs are not so fortunate. These exchange-traded products track a variety of otherwise-inaccessible investments and provide handy tax benefits for any higher-turnover strategies. These benefits pushed ETNs into a dominant position among commodities funds, where the ETF alternatives tend to be set up as partnerships and require fairly complicated tax accounting. However, these products do not have a claim on a separate trust of assets but instead are debt instruments issued by the backing bank and redeemable on a daily or weekly basis for the value of a promised index return minus expenses. Those seeking a more in-depth explanation of the ETN structure should read this recent article by John Gabriel. In summary, ETNs eliminate tracking error on the underlying instrument and simplify taxes, but they expose shareholders to the credit risk of the backing bank. If the bank declares bankruptcy, shareholders in an ETN have to queue up along with all the other debtholders to try to claim their share of the company's assets.

    Normally this credit risk appears negligible, especially given the liquidity and frequent redemptions allowed with ETN shares. However, when shares in Deutsche Bank and Barclays have fallen around 80% in the past year and the bankruptcy of Lehman Brothers remains fresh in every investor's mind, bank credit risk seems very worthy of consideration. Even if we take for granted that shareholders can pull all their assets out of an ETN before the bank collapses entirely, there still remains the disruption of having to liquidate an investment position in an emergency situation, with possible adverse tax consequences or difficulty finding a new position to fill the same place in an asset allocation. This concern does not necessarily justify selling out of any ETN stakes right now, but it certainly should push investors to consider alternatives in case their fund's backing bank should grow wobblier.

    Investors in the Deutsche-Bank-backed series of PowerShares ETNs are particularly lucky when looking for ETF alternatives. Those content with a single-long position in a given Deutsche Bank commodity index can find an exact equivalent among the PowerShares ETF lineup. For those who used PowerShares ETNs to get leveraged or short commodity exposure, ProShares just issued a lineup of double-long and double-short commodities ETFs based on the DJ-AIG broad index as well as crude oil, gold, and silver funds. Of course, we must list our normal caveats for leveraged and short ETFs: These funds are extremely tax-inefficient because of the short-term instruments they use, and their compounded returns tend to drastically underperform the benchmark over long periods due to volatility drag and the effects of constant leverage. The former provides reason to stay in the ETN so long as Deutsche Bank appears fairly solvent, while the latter warning applies to all leveraged and short funds.
    ...

    So long as the U.S. and U.K. governments wish to avoid another complete collapse like that caused by the Lehman Brothers bankruptcy, ETN shareholders can rest a little easier. Just keep an eye on the news, and always have a potential replacement in mind."

    Good stuff for me to remember.

    Lady
    If you think education is expensive, try ignorance. - Derek Bok

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