FAS for Long Term IRA Acct

[jprad]

Quote from ItermBonds:

Thanks for mentioning this. What I meant was in the context of timing. Say if you bought one of these leveraged ETF's and it tanked on you by $40 because you bought it at $100; you would have a much better chance at buying something like FAS in the $2 or $3 range if we were close to a "bottom" -- that is considering in the first place you wanted to take on this kind of risk.

If you're sensible enough to buy FAS at a short-term bottom you would have never bought FAZ near it's short-term top.

 

[SCI new york]

FAS for a long term account is still aggressive, truthfully, i hate the financials and would say if you want to get involved in something of that nature, you're probably better off buying BGU

 

[Trader666]

Not necessarily... shorting both makes money in churning markets and loses in directional moves. Had you shorted both from late Feb until a few days ago you would have had your head handed to you.

Quote from Random.Capital:

For FAS/FAZ, that has been exactly the right thing to do. Unfortunately, one of them is now trading at $3 and room for shorting is scarce. So what happens next is...not completely clear.

 

[Random.Capital]

Quote from Trader666:

shorting both makes money in churning markets and loses in directional moves.

Then the original suggestion - buying FAS and holding on for a long term big bull move - has merit. It may not be the promised 3x-banger but it should be very positive regardless if the move develops as envisaged.

 

[Trader666]

If the Russell 1000 Financial Services Index STEADILY increases for YEARS, yes. But a few large down moves or a lot of churning along the way could kill it.

If you model how leveraged ETFs are priced you'll see that different price paths will result in different ending values of the leveraged ETF, even if the ending values of the underlying are the same.

Quote from Random.Capital:

Then the original suggestion - buying FAS and holding on for a long term big bull move - has merit. It may not be the promised 3x-banger but it should be very positive regardless if the move develops as envisaged.

 

[jprad]

Quote from Trader666:

If the Russell 1000 Financial Services Index STEADILY increases for YEARS, yes. But a few large down moves or a lot of churning along the way could kill it.

Add to that the fact that ETFs have to distribute gains annually.

Worst case would be to buy more shares with the distributed gains then get hammered in the following year. The net, due to additional shares, is an amplified down move.

 

[Port1385]

I am an investor over the long term in the FAZ for my IRA. It has done nothing but go up since the start of the year.

 

[jprad]

Quote from Port1385:

I am an investor over the long term in the FAZ for my IRA. It has done nothing but go up since the start of the year.

It's already given back 70% of that gain the past 3 days.

What are you waiting for, to break the $37.82 swing low?