What the hell just happened with DDM?

[IronFist]

DDM is a 2x long Dow index. In other words, if the Dow goes up 2%, DDM goes up 4%. If the Dow goes down 2%, DDM goes down 4%.

So what happened today? It opened down 6%, but the Dow certainly didn't go down 3%. Now I'm happy I sold my shares at around 86.

http://finance.yahoo.com/q/bc?t=5d&s=^DJI&l=on&z=m&q=l&c=ddm

Obviously DDM does not truly reflect what's happening with the Dow.

 

[Avid_Consumer]

appears dividend related

 

[IronFist]

Can you explain how that would work? I thought the momentum always = 2x as volatile as the Dow.

 

[EqtTrdr]

same thing happened to RYVNX today from what I see...


damn thing dropped .50....

must be dividend related somehow

 

[Avid_Consumer]

i don't know any details, just looked it up on google finance and saw a conv about it there

 

[dougman100]

http://www.proshares.com/funds/distributions

They have a total of $6.80 distribution coming. If people don't want it, they need to get out of the fund. That may cause some imbalances in the price. ??

 

[EqtTrdr]

Quote from dougman100:

http://www.proshares.com/funds/distributions

They have a total of $6.80 distribution coming. If people don't want it, they need to get out of the fund. That may cause some imbalances in the price. ??

who is the distribution/dividend payable to?

 

[dougman100]

The shareholders on the date of record, which is Dec. 22nd. The fund, like any fund, will drop in price after the distribution is done. That's why looking at a chart of a mutual fund can be decieving. The capital gains gets shed off to the shareholders, making it taxable to them. The price has to adjust that distribution. People reinvest the cap gains and dividends, or they just take them and leave them in cash. It's no advantage to get that cap gain or dividend. The price adjusts.

 

[dougman100]

http://mutualfunds.about.com/cs/taxes/a/distributions.htm
This might be helpful too.

 

[dougman100]

For those who don't know, buying (and holding) a mutual fund or ETF in December, sometimes November can be dangerous tax wise. If you buy DDM Friday and hold it, you'll get that 6.80 cap gain/dividend and potentially haven't made any money on the fund. So you want to keep an eye on distributions in mutual funds and ETFs in Nov and Dec. You might buy in just to get a capital gain distribution. If it's in an IRA, who cares.