? regarding the use of Etf's & 2x etf's for long term

pak

pak

I read sometimes that holding 2x Etf's for the long term (multi-years) is not a good way because of ????...and that all these leveraged etf's are only good for Daytrading??

Is long term investing in any non-leveraged Etf the best use of these Etf's???

any other sugestions?

and thanks for your help!
 
redbaron1981 said:
Lookup "Time Decay".
More...
Leveraged ETF's 2x -3x- use "derivatives-" THAT ARE REBALANCED DAILY. Meaning, the trade is closed that day,and a new position opens- at a new cost basis- occurs the following day- I think this is essentially correct: You don't get the carry over by holding - of the initial price you purchased at- although your cost of entry on your trade on day 1 reflects the entry & the close- On day 2 , the leveraged ETF repurchases the shares- at a different price from where they closed-
I assume different leveraged instruments- from different providers- will rebalance differently- but if you are interested in considering specific leveraged ETF's- 2x or 3x-
it is essential that you do your due diligence and compare the leveraged performance against the underlying index/fund.
The best way to do this- IMO- is to back test the net results by going back several years-
Take a weekly chart- track the underlying open and close- and then compare the leveraged instrument you are considering- Open and close- and you will discover that a 2% move in the underlying does not always translate into a corresponding multiple gain in the leveraged 2x or 3x.
This is not to say that you need to close the trade daily- I held CURE- a 3x for several months in a trending period and it provided a nice return- but that may have been just luck in the timing.
Just take the time to do the homework on what you are interested in.Do the comparisom check . and understand that the volatility swings in a leveraged instrument are much wider than the underlying.
Good Luck-
 
Thanks to both of you!

Do either of you have any opinion on investing in a long term India non-leveraged etf???
 
pak said:
Thanks to both of you!

Do either of you have any opinion on investing in a long term India non-leveraged etf???
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"Investing" in a specific country is similar to buying a specific stock- and thinking you will ultimately be rewarded- You have inherent risks associated with individual stocks- as well as individual countries- It could work out well in your favor- or go strongly against you.
This article was from Feb- very positive on India- and written just at the "peak"-since then-price has had a pullback-
It is important to note that EPI is still well below it's 2011 high- while China- FXI- despite it's major sell-off this year- is now just back at that 2011 level, having had a massive run up in price- much higher- The FXI investor/trader would have had the opportunity to benefit more from the greater momentum than the lesser results in the EPI.

http://investorplace.com/2015/02/india-etf-inda-indy-epi-emerging-markets/#.VclJ5XFVhBc-

If you were to have invested back in 2011 in EEM- or EPI- Both are at similar returns today- thumbnail view- down perhaps 20% +/- from past highs- However- EPI lost 50% of it's value in 2013. EEM did not have that kind of volatility-

That kind of individual volatility - over a 50% decline- makes a good case for reducing the risk by painting with a wider brush and not be invested in too country specific.

Good Luck
 
Be cautious with leveraged ETFs, the underlying is incorrect.
For example the WTI trigger 42 around 3/18/2015 and UWTI lowest was $1.78, now is trading at the same level and UWTI is trading at $1.05. what do you think?
Never trust in leverage ETFs.
 
Pedro Montero said:
Never trust in leverage ETFs.
More...

The double long index ETF is ok IF it's a trending market (examples: SSO, QLD). However, I would NOT trust the triple longs/shorts, given the time decay.

The gold ETF miners (JNUG/NUGT) just announced yet ANOTHER reverse split as of September 10th. Watch for a pop as the market sheds a large majority of the float, as they usually make for decent trades shortly after the reverse split, but lousy long term holds.

Here's an article regarding the upcoming reverse splits:

http://www.foxbusiness.com/markets/...gold-miners-etfs-to-host-reverse-split-party/
 
partial -
sowterdad said:
Leveraged ETF's 2x -3x- use "derivatives-" THAT ARE REBALANCED DAILY. Meaning, the trade is closed that day,and a new position opens- at a new cost basis- occurs the following day- I think this is essentially correct: You don't get the carry over by holding - of the initial price you purchased at- although your cost of entry on your trade on day 1 reflects the entry & the close- On day 2 , the leveraged ETF repurchases the shares- at a different price from where they closed-
I assume different leveraged instruments- from different providers- will rebalance differently- but if you are interested in considering specific leveraged ETF's- 2x or 3x-
it is essential that you do your due diligence and compare the leveraged performance against the underlying index/fund.
The best way to do this- IMO- is to back test the net results by going back several years-
Take a weekly chart- track the underlying open and close- and then compare the leveraged instrument you are considering- Open and close- and you will discover that a 2% move in the underlying does not always translate into a corresponding multiple gain in the leveraged 2x or 3x.
This is not to say that you need to close the trade daily- I held CURE- a 3x for several months in a trending period and it provided a nice return- but that may have been just luck in the timing.
Just take the time to do the homework on what you are interested in.Do the comparisom check . and understand that the volatility swings in a leveraged instrument are much wider than the underlying.
-
More...
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Good points-profit ; probably NOT luck, but a good trend can be real helpful Some leveraged products pay no dividends, of course, since managers-money managers should be paid well,, no problem.

Chop -sideways -slop trend can chop UP a non leveraged-cash ETF;
guess what can happen with leverage-LOL ??????????????????????? Good question.
 
After seeing Mondays' low prints in the 1100 dow point selloff I am thinking Mutual Funds.
NAV at the end of day , without stops, may be a better deal in some cases and of course, not, in other cases.
Any Gil Blakes out there?
 
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