tag:blogger.com,1999:blog-5465015914589377788.post8842158490982429969..comments2024-03-20T09:32:16.592-04:00Comments on Michael James on Money: Are Leveraged ETFs Leaky?Michael Jameshttp://www.blogger.com/profile/10362529610470788243noreply@blogger.comBlogger8125tag:blogger.com,1999:blog-5465015914589377788.post-45390583183123988982009-05-25T11:15:56.756-04:002009-05-25T11:15:56.756-04:00Preet: I thought about shorting the bull and bear,...Preet: I thought about shorting the bull and bear, but I'm not sure that the gains would be enough to offset the shorting costs (borrowing shares and maintaining margin) if you maintain a balance in the dollar amount of each ETF. You could try not rebalancing, but this adds risk to an otherwise mostly riskless arbitrage.<br /><br />Anonymous: I agree that short-term investing is essentially gambling.Michael Jameshttps://www.blogger.com/profile/10362529610470788243noreply@blogger.comtag:blogger.com,1999:blog-5465015914589377788.post-85957177099461094542009-05-23T09:00:52.488-04:002009-05-23T09:00:52.488-04:00the only people who recommend these crappy ETFs ar...the only people who recommend these crappy ETFs are the people who manage them and put the MER in their pockets.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5465015914589377788.post-47279789713525397192009-05-22T14:49:11.057-04:002009-05-22T14:49:11.057-04:00Most investment advisors that I've spoken with (an...Most investment advisors that I've spoken with (and many that are featured on BNN) advise people to stay away from these ETFs as well. The ones that do recommend them basically say that they should be used for, at most, a day trade. Since the vast majority of investors cannot predict the direction of the market on a day to day basis I would consider investing in these ETFs for a day to be gambling.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-5465015914589377788.post-43424384062115315122009-05-22T12:45:22.966-04:002009-05-22T12:45:22.966-04:00Okay, this begs the question: short both the bull ...Okay, this begs the question: short both the bull and bear in equal amounts? Does this capture the fees and drag in your favour?<br /><br />Great post, absolutely fantastic post.WhereDoesAllMyMoneyGo.comhttps://www.blogger.com/profile/09185007666460707356noreply@blogger.comtag:blogger.com,1999:blog-5465015914589377788.post-60743254531448253592009-05-22T08:31:26.245-04:002009-05-22T08:31:26.245-04:00Well done. Thank you for your thought provoking re...Well done. Thank you for your thought provoking research. It's always informative and a pleasure to read your blog.<br /><br />I hope you keep up the good work.Jim Turnbullhttps://www.blogger.com/profile/16141660549510415017noreply@blogger.comtag:blogger.com,1999:blog-5465015914589377788.post-21592661571937376192009-05-21T22:51:36.023-04:002009-05-21T22:51:36.023-04:00Really well-researched and calculated post. This ...Really well-researched and calculated post. This belongs in a journal of finance.<br /><br />The Thicken My Wallet post you linked was helpful in explaining the rebalancing mechanism that throws a wrench into the works. After reading the first part of his post, I also thought the ETF's systematic risks are not inconsequential, either. Their use of derivatives could conceivably cause some kind of financial shock to the ETF's stability.<br /><br />I agree with your avoidance of these funds.genehttps://www.blogger.com/profile/05608927986297939720noreply@blogger.comtag:blogger.com,1999:blog-5465015914589377788.post-67815075834091053662009-05-21T14:09:34.532-04:002009-05-21T14:09:34.532-04:00Canadian Investor: I was hoping that my readers m...Canadian Investor: I was hoping that my readers might have a theory or two. I'm at a loss to explain this apparent leak.Michael Jameshttps://www.blogger.com/profile/10362529610470788243noreply@blogger.comtag:blogger.com,1999:blog-5465015914589377788.post-19963750505042431162009-05-21T13:49:13.809-04:002009-05-21T13:49:13.809-04:00Michael, excellent post ... but you are not done. ...Michael, excellent post ... but you are not done. Your task is now to figure out why your two experimental portfolios performed as they did. Something important for investors is hidden within.CanadianInvestorhttps://www.blogger.com/profile/05645767559302303541noreply@blogger.com