Levered ETF's--Portfolio Salvation or Damnation?

[WinstonTJ]

Quote from winstontj:

wow - a lot of mis-information here in this thread from the first post (yahoo article) to the suggestions as to why the pairs don't always track equally.

All of these things are index based ETFs and most have "optimized baskets" which seek to accuratley track the underlying index - but don't always track perfectly.

Most often when you see a pair's (bull & bear same index) tracking or intra-day price deviate from where it should be it can contributed to the previous day's close. If one closed at a discount or premium it will usually self correct at the next open - leaving one right off the bat trading up or down from the index because of the correction.

Look in the funds' prospectus - you will find that the bull & bear pairs are ALWAYS comprised of the same thing, only one is short and one is long so the holdings will be different, though they will still track the same index - at least in my experience.

quick correction - third paragraph should read

Most often when you see a pair's (bull & bear same index) tracking or intra-day price deviate from where it should be it can contributed to the previous day's close. If one closed at a discount or premium it will usually self correct at the next open - leaving one right off the bat trading up or down ON THE DAY because of the correction. If the correction put the ETF up or down by x% you will notice that it will remain that way for the day

 

[Trader666]

Quote from winstontj:

quick correction - third paragraph should read

Most often when you see a pair's (bull & bear same index) tracking or intra-day price deviate from where it should be it can be attributed to the previous day's close. If one closed at a discount or premium it will usually self correct at the next open - leaving one right off the bat trading up or down ON THE DAY because of the correction. If the correction put the ETF up or down by x% you will notice that it will remain that way for the day

fixed

 

[WinstonTJ]

Quote from Thermactor:

I avoid ETFs that present tax problems - USO and ProShares spring to mind. PowerShares is A-OK though and I've made quite a bit of money over the past few days on DXO

Therma - how important is it to you to know distribution schedules ahead of time? Would it make a specific brand of ETF more appealing if things were not so "in the dark"?

 

[WinstonTJ]

666 - name calling is cool, does it make you feel good to put someone else down?

I've sent you two PMs suggesting that name calling doesn't give you reputation and offering to clarify.

Do you really think that post count matters or that the fellow members on this forum are going to believe someone who calls names to people who challenge you?

I know quite a bit about the structure of these things, not always how they behave - but i know exactly why they do what they do - and if I don't know something I'll be happy to ask and find out.

Just trying to contribute to the forum and its members, not call names so please stop.

 

[Trader666]

First, I've received only ONE PM from you. So check your sent box.

Second, you're not challenging me, you're putting out bad info and based on your bad info you're saying I'm wrong. Like what I corrected here:
http://www.elitetrader.com/vb/showthread.php?s=&postid=2248156#post2248156
Act like a jerk and a fool I'll treat you like one. And I'll call you whatever I like. Who the hell are you to tell me what to do?

Finally, you're the one who started that obnoxious "fixed " crap.

Quote from winstontj:

666 - name calling is cool, does it make you feel good to put someone else down?

I've sent you two PMs suggesting that name calling doesn't give you reputation and offering to clarify.

Do you really think that post count matters or that the fellow members on this forum are going to believe someone who calls names to people who challenge you?

 

[Thermactor]

Quote from winstontj:

Therma - how important is it to you to know distribution schedules ahead of time? Would it make a specific brand of ETF more appealing if things were not so "in the dark"?

If I was buying and holding, not trading, I would be concerned with distribution schedules. But since my holding timeframe is no more than 3 days, I'm much less concerned with them. Are you concerned with tax treatment of capital gains v. ordinary income?

 

[WinstonTJ]

Quote from Thermactor:

If I was buying and holding, not trading, I would be concerned with distribution schedules. But since my holding timeframe is no more than 3 days, I'm much less concerned with them. Are you concerned with tax treatment of capital gains v. ordinary income?

Thermactor its fair to say that twoards the end of the year you will start to see distributions. look at prior years and then find the day of the week (if they usually fall on fridays, mondays, etc.) and you can tell - some of the larger companies announce dates but do not announce amounts. Year end is tough though.

Am I concerned with tax treatment personally? No... but from a Fund's perspective yes we are concerned and we try to do everything we can to avoid tax liabilities but with bull and bear funds, unless the market goes totally sideways there is no avoidance.