man, i saw TBT at 35.87 two different times and didn't buy and now it's sitting at almost 42. that makes me sad. now i'm not sure if i should roll with it or hold off considering that's a 16% move in about 1 week.
Yeah I was wanting to get in and missed that move as well. The talking heads on TV have been pumping it.
i'm not sure about any of these double levered etfs if you are looking for an investment. they only seem go down over the long run so it is dangerous to hold for anything other than a swing trade.
Definitely - look at SRS. IYR is down 42% (61 to 35.5) since the start of 2008. You'd think the 2x short SRS would be up huge, but it's down 57% over the same time! You get killed over the long term with those things.
Someone on CNBC last week pointed out that both DIG (2x long oil/gas companies) and DUG (2x short oil/gas companies) were down for 2008, which is just bizarre. It seems then a potential play would be just shorting the opposite ones. If you believe the market is going up, short DIG and vice-versa. Then if they are losing value anyway, you get a tiny extra kick that way.
Seems to be pretty strong resistance for oil at around $50. That's about what oil hit before the pre-holiday slide to $35ish. Of course, we have Middle East tension now.
oh, there's no doubt you don't use the levered ETF's as an investment. i've just played around with excel spreadsheets where i put in random daily moves over a long time period and shown myself that they don't work which combined with all the real world evidence (like DIG and DUG both down) is all you need to know. they actually outperform the 2x long-term market move if the market only moves in one direction, but the mathematics of the ups and downs kill you. for example, if over a 2 week period the underlying index has a sustained upward move of 20%, the double short would probably only lose 35% instead of 40% and the double long might make 45% instead of 40%. but if it lost all of that 20% in the following 2 weeks, it wouldn't be even, it would be negative. and so every up and down is just costing you money and with the volatility right now, makes it virtually impossible as an investment. i wish there was just a short treasuries instead of double short so you could make a long term bet against them without the loss of value over time. but i don't currently know of one. plus, with everyone pimping TBT so hard and a 20% move up in about a week, i wouldn't feel good jumping in right now. i've thought about this. you have to pay the interest on the borrowed money so the loss over time would need to be bigger than half of whatever interest you are paying (since you assume that going long costs you money over time and going short makes you money over time, the rate of that loss just needs to be half of your interest rate for the total difference to be worth it). whether it loses value that fast i'm not quite sure, but it seems to. i've even thought about shorting both DIG and DUG (or any opposing levered ETFs) and seeing if they could both lose money quicker than i'm paying out. althought i also remember tracking the total value of SSO and SDS from a given point, assuming an investment of $100 in each, and the value at any given time swung a lot. you could be down to 160 or up to 260 from what i remember. so it still seemed to be just a matter of timing. but maybe we didn't track it back far enough.
Facing Losses, Billionaire Takes His Own Life <i> Mr. Merckle, 74, was found dead on railroad tracks near his villa in the southern German hamlet of Blaubeuren on Monday evening. German authorities in the nearby city of Ulm confirmed the death and said there was no sign anyone else was involved. “The distress to his firms caused by the financial crisis and the related uncertainties of recent weeks, along with the helplessness of no longer being able to handle the situation, broke the passionate family businessman, and he ended his life,” the family said in a statement. The police said a suicide note had been found; its contents were not publicly released. More than any other single investment, Mr. Merckle’s poorly timed bet on Volkswagen shares caused the financial distress that led to his death. Last fall, Mr. Merckle lost hundreds of millions of euros when he was caught in a brief but ferocious speculative riptide linked to a campaign by Porsche, the sports car manufacturer, to seize control of Volkswagen. He was facing the dismantling of his empire and the sale of major holdings at the time of his death. Porsche announced late Monday — around the time Mr. Merckle was taking his own life — that it had acquired slightly more than 50 percent of Volkswagen shares, up from a 42.6 percent voting stake in October. Porsche has said it planned to buy 75 percent of Volkswagen during the course of the year, as it seeks more operating control of Europe’s biggest carmaker. A native of Dresden who made his way to Western Germany after World War II, Mr. Merckle parlayed a family business in chemicals into one of the biggest pharmaceutical concerns in the world. Ratiopharm, a maker of generic medicines that was a recognized brand itself, became the pride of the family. Other businesses included Phoenix, a pharmaceutical wholesaler; and HeidelbergCement, a building materials supplier that in 2007 acquired a British rival, Hanson, to become a leading global player. <b> Forbes estimated Mr. Merckle’s fortune at $9.2 billion in 2008, making him No. 94 on its list of the world’s richest people. </b> The financial crisis began taking its toll on HeidelbergCement last year as the debt incurred to buy Hanson became more burdensome. Standard & Poor’s lowered the company’s credit rating as liquidity became scarcer in global market turmoil. In November, it became clear that Mr. Merckle had lost an amount of money in the “low hundreds of millions” by wagering that shares in Volkswagen would fall, a financial transaction known as short-selling. The bet had put him up squarely against a celebrated family, the Porsches. The sports car manufacturer from nearby Stuttgart was in the process of taking over Volkswagen. On Oct. 26, Porsche announced it had secured stock and options equivalent to about 75 percent of Volkswagen shares. Short-sellers, who borrow shares and sell them, hoping to buy them back later at a lower cost, were caught in a bind, since the revelation implied a shortage of VW shares to cover the short-selling. Intense demand caused VW shares to skyrocket to just over 1,000 euros ($1,260), from 210 euros in two trading sessions. That briefly made the automaker the world’s most valuable company by market capitalization. Porsche subsequently sold some of its VW shares to ease the tension in the market, but not before the episode upset the weightings in Germany’s benchmark DAX index and injured the country’s reputation as a financial center, in the estimation of many investors. Volkswagen shares were up 12 percent on Tuesday, to close at 285 euros. For Mr. Merckle, the damage was more concrete. The last weeks of his life were spent wrangling with a consortium of banks for a bridge loan that would tide over his investment vehicle, VEM Vermögensverwaltung. It became increasingly clear that Mr. Merckle would have to sell part or all of Ratiopharm, widely regarded as his most attractive asset. The situation cost speculators in New York and London dearly, leading to a fair amount of schadenfreude in Germany, where financial trickery is looked upon with much disdain. Among the known short-sellers were two large hedge funds, Glenview Capital and Greenlight Capital. Germans were bewildered to discover that one of their own had also engaged in speculation, but their sympathy was not aroused. The Merckle family was based in the southern German state of Baden-Württemberg, home to many privately held companies that are heavyweights in their field. The governor of the state, Günther Oettinger, briefly considered guaranteeing a loan for Mr. Merckle, but quickly pulled back amid a public outcry. Mr. Oettinger said in a statement on Tuesday that he was “deeply shaken” by the news of Mr. Merckle’s death. He lauded Mr. Merckle as a man who took his social responsibilities seriously while building up a family-owned business “of European significance.” Like many wealthy German families, the Merckles were well known, but avoided the limelight, especially recently as the patriarch’s financial distress deepened. Until recently, Mr. Merckle’s son, Philipp Daniel, one of his four children, ran Ratiopharm. </i>
Mango, I read that yesterday and thought to myself it's so sad, but his and his family's pride was destroyed - that apparently was enough for him. Looking at the Madoff situation, I can't believe we haven't heard more people "ending it all" after hearing of the massive losses people who invested with him have been put through. These are some very bad times and I worry we haven't seen the end of it - I hope people think rationally when making their decisions.
India's Enron? I hope you guys didn't have any ties to this stock. It's down almost 80% on the BSE. It was often brought up in trading circles. Its main competitor over there I think would be a company like Infosys : Satyam Computers (NYSE : SAY) http://www.reuters.com/article/marketsNews/idINSP38766920090107?rpc=44 Letter from the company's chairman to the board : http://www.reuters.com/article/marketsNews/idINBOM36807220090107?rpc=44&sp=true The sad irony in all this, if I'm not mistaken, is that "Satyam" means "truth". Good grief.
well, my short trades finally shot past what I bought at and are making some money. Based on what my amateur analysis, I would guess there was accumulation around this average so I'm expecting further downside for at least another day or two. Anyone with same reads?
I follow the energy sector quite a bit and the XLE looked toppy because some of its major components looked toppy: XOM CVX COP Crude ran into resistance around 50. Once XLE stalled, then SPX stalled Here are some interesting links that explains my thinking. http://crudeoiltradingsmallspecs.blogspot.com/ http://www.indexarb.com/stockVsIndexesPercentWt.html#sp500IndexAnalysis http://www.sectorspdr.com/spdr/composition/?symbol=XLE
Another investing question with regards to shorting and dividends. Let's say you own a $10 stock that pays a $1 dividend (for simplicity). The day before the dividend record date, the stock goes down to $9 to account for the dividend being paid. The owner of the stock is no different than they were, though. For someone who shorted it, though, how does this work. Does the person who holds it short PAY a dividend? If not, couldn't you just short the stock the day before the dividend is to be announced and then close the position the next day after the price of the dividend comes out? If you do pay the dividend, how does that work? It comes out of your cash position?
