Next play: Shorting China?

[Scanner]

KV,

No, you are right. . .even the recent double short silver ETF is doing nothing like the prospectus says it's supposed to.

I was saying I was wrong, my thinking was faulty.

[kv968]

Scanner, I don't think your idea of China being possibly due for a correction is faulty, I just wanted to make sure that you understood that an inverse ETF (let alone a leveraged one) can have a SERIOUS tracking error over time. And just to make clear what I'm talking about, I ran a few numbers (since JimOhio isn't around to do that "fun" stuff anymore ) just to show you better than I can tell you.

Here are the returns of SPY (S&P 500), SH (Proshares inverse S&P 500) and SDS (Proshares double inverse S&P 500). All top indexes in their categories.

Returns from 11/1/07 to 2/1/09:
SPY = -52.2%
SH = 41.9%
SDS = 99.2%

Not bad. It almost tracked exactly like they were supposed to for a little over a year's time and who wouldn't take that gain? Ah, but let's let it ride for another year or so...

Returns from 11/1/07 to 5/1/11 (3 1/2 years):
SPY = -13.3% (ah, still down so I should be doing good with at least a 10% return, but wait a minute...)
SH = -32.9%
SDS = -58.9%


What the hell was that? That my friend was holding an inverse fund as an index went up in the short term while still decreasing in the long term. Again, I'm not saying you're wrong, but good luck and get the profits when you can.

[jteezie]

Good luck. China's one of the few places around with IPOs that can earn 100%-300% short term gains.

[kv968]

Good luck. China's one of the few places around with IPOs that can earn 100%-300% short term gains.

Yeah, just like tech stock IPO's in the late 90's

[KTP]

A smart person would have shorted Apple last year when it was very oversold looking at $200, Caterpillar at $70, Netflix at $100, and Chipotle Mexican Grill at $150.

That smart person would be very broke right about now.

[gambler2075]

KV,

No, you are right. . .even the recent double short silver ETF is doing nothing like the prospectus says it's supposed to.

I was saying I was wrong, my thinking was faulty.

No, the double short silver (ZSL) does what it was supposed to do, and that is short SLV 2X on a DAILY basis, not on a longer time frame. So you basically are just using it to daytrade, not to buy and hold for longer periods of time. Anyone that is holding a doubly leveraged ETF for longer than MAYBE 2 days is asking for trouble.

g