Video on leveraged ETFs from Coolhand's TSPTalk thread. Must watch if trading leveraged ETFs.
http://www.tsptalk.com/mb/showthread.php?t=6317
Video on leveraged ETFs from Coolhand's TSPTalk thread. Must watch if trading leveraged ETFs.
http://www.tsptalk.com/mb/showthread.php?t=6317
This also from his thread.
http://www.indexuniverse.com/section...y-returns.html
This should work better:
http://www.youtube.com/watch?v=qEYW2CPWHYE
"If you were to assume that based on this cumulative return of the index, the bull fund would have experienced a 27% loss and the bear fund would've experienced a 27% gain, you would unfortunately be incorrect," wrote the company in the document. "In fact, for that time frame, the bull and bear funds returned -34.46% and 6.32%, respectively."
So, does that mean we should be shorting the bull fund (FAS) rather than buying the bear (FAZ)?
Actually, after listening to the videos about the daily compounding, it sounds like we should always be shorting the opposite fund with every trade during a volatile market. If you think financials are going down, short FAS. If you think they are going up, short the FAZ. At least until they change to monthly compounding.
Is there a flaw in my thinking?
-- Tom | My Trades
Tom, check this out:
http://www.youtube.com/watch?v=PDiKjOpBMQA
Very interesting. It's interesting that it was just posted the other day and we just came to the same conclusion on our own today.
Sell them both short (long and short, as almost hedge) and they should both lose money, thus both the short positions make money in the long-term. Hmmm.
-- Tom | My Trades