Short ETF

[Yankee23]

Hello guys. If the theory is correct regarding 2009, do folks believe that the best market bet is a short ETF like DOG or SH? The greater the crash, the greater the upside for those ETFs, no? Unless someone has a better short ETF that they like?

Also, where can I track the daily or weeklt market P/E ratio, rather than having to wait for Robert Shiller's data.

Thanks!

[freddyv]

Hello guys. If the theory is correct regarding 2009, do folks believe that the best market bet is a short ETF like DOG or SH? The greater the crash, the greater the upside for those ETFs, no? Unless someone has a better short ETF that they like?

Also, where can I track the daily or weeklt market P/E ratio, rather than having to wait for Robert Shiller's data.

Thanks!

Be very careful in dealing with ETF's. I suggest you do some research regarding them and you can start by searching the Generational Dynamics forum as we have had some good discussions and there are some links to off-site articles on the subject.

I have been using SDS, a 2x inverse of the S&P 500 since late 2007 and its performance has been a blessing for my portfolio. You really do not want to hold it long-term as it will "deteriorate" over time but if you can jump in as the market begins to roll over - a few weeks ago would have been a perfect time - and get out again after a good 10-20% move in the market you will do very well.

I hear enough warnings about ETF's to keep a very close eye on them, espcially SDS, since I use it on a regular basis.

Here is a direct link to an S&P earnings report:
http://www2.standardandpoors.com/spf/xl ... EPSEST.XLS

Here is where you can see the Wall Street Journal's P/E page for the major indexes:
http://online.wsj.com/mdc/public/page/2 ... dc_h_usshl

This last one is reporting P/E ratios for the S&P and Nasdaq that don't add up at all so always verify any suspicious numbers.

--Fred

[wvbill]

I am sure you guys know a lot more about these than me, but I have been holding Rydex 2x Inverse DJIA mutual fund which I started purchasing August 2007.

At this point I show a paper profit of 130%. I will continue to hold as I feel like most, here, that the big down move is yet to come. It is true that there is some erosion of profit over time due to flucuation, but I am happy so far with the results.

My point is that inverse mutual funds are also an option, as are ETF's. Each has its pluses and minuses.

I tried trading out and then back in with a small portion of the position -- that has not worked well -- I have not been able to get back in (I did get out with a profit). So, I think I will just continue to hold.

Bill

[cody]

Bear Market ETFs they go the opposite direction of index they represent. The market has been in a rally for a while now so you can get ready for the next downturn whenever that happens

http://comguy.org/stocks/BearMarketETF.xls

Code: Select all

Symbol	Name	Price	Volume	Day Hi	Day Lo	Date	P/E	50-day MA	200-day MA	Prev. Close
FAZ	FINANCIAL BEAR 3X	$4.49	426,232,128	$5.54	$4.43	8-May-09	N/A	$13.67	$43.71	$5.67
SKF	ULTRASHORT FINANC	$38.94	60,913,156	$44.64	$38.69	8-May-09	N/A	$73.63	$129.36	$45.30
SDS	PT ULTRSHRT SP500	$56.03	46,866,084	$58.01	$55.72	8-May-09	N/A	$69.35	$83.38	$58.75
SRS	ULTRASHORT REAL E	$19.78	44,857,208	$22.99	$19.55	8-May-09	N/A	$37.04	$79.33	$23.16
QID	PS UTLRSHRT QQQ	$37.20	26,283,564	$37.91	$36.08	8-May-09	N/A	$42.27	$58.91	$37.20
BGZ	LARGE CAP BEAR 3X	$36.43	12,138,593	$38.69	$36.25	8-May-09	N/A	$51.53	$66.94	$39.35
TZA	SMALL CAP BEAR 3X	$25.05	9,681,916	$27.39	$24.79	8-May-09	N/A	$39.04	$58.84	$27.83
DUG	ULTRASHORT OIL & 	$17.56	9,546,234	$18.54	$17.20	8-May-09	N/A	$22.93	$29.26	$19.14
DXD	PROSHARES ULTRASH	$48.19	7,969,216	$49.56	$47.97	8-May-09	N/A	$57.02	$66.97	$50.15
TWM	ULTRASHORT RUSSEL	$44.83	6,246,206	$47.40	$44.44	8-May-09	N/A	$58.75	$84.43	$48.00
SH	SHRT S&P500 PROSH	$65.78	4,482,078	$67.00	$65.67	8-May-09	N/A	$72.98	$80.43	$67.38
FXP	PROSHARES ULTRASH	$15.20	3,138,167	$15.94	$15.01	8-May-09	N/A	$21.96	$45.15	$16.64
EEV	PROSHARES UTLRASH	$23.52	2,638,721	$24.66	$23.40	8-May-09	N/A	$33.59	$61.32	$25.21
ERY	ENERGY BEAR 3X	$20.43	1,714,040	$22.27	$19.78	8-May-09	N/A	$31.12	$38.80	$23.35
SSG	ULTRASHORT SEMICO	$44.39	857,934	$45.48	$41.07	8-May-09	N/A	$47.02	$89.99	$42.03
MZZ	PRSHS ULTRSHR MC4	$38.56	781,839	$40.65	$38.36	8-May-09	N/A	$49.88	$74.11	$41.20
DOG	PROSHARES SHORTDO	$66.53	457,187	$67.39	$66.30	8-May-09	N/A	$72.09	$76.47	$67.72
EDZ	EMERGING MKTS BEA	$16.92	366,463	$18.19	$16.83	8-May-09	N/A	$29.85	$53.88	$18.79
TYP	DAILY TECH BEAR 3	$28.78	343,131	$29.95	$27.80	8-May-09	N/A	$34.04	$50.32	$28.63
PSQ	PROSHARES SHORT Q	$60.38	304,762	$61.02	$59.55	8-May-09	N/A	$64.19	$73.45	$60.54
EFU	PROSHARES ULTRASH	$67.68	215,242	$71.51	$67.39	8-May-09	N/A	$91.05	$118.95	$74.09
DZZ	DB GOLD DBL SH ET	$22.63	194,108	$23.15	$22.54	8-May-09	N/A	$23.29	$26.96	$22.89
MYY	SHRT MC400 PROSHA	$57.72	190,495	$59.32	$57.68	8-May-09	N/A	$65.20	$76.18	$59.70
REW	ULTRASHORT TECHNO	$48.57	190,249	$49.91	$47.31	8-May-09	N/A	$53.66	$83.34	$48.40
SEF	SHORT FINLS PROSH	$54.37	175,965	$58.08	$54.35	8-May-09	N/A	$71.91	$86.55	$58.50
RFN	RYDEX ETF TRUST	$9.27	135,299	$10.75	$9.22	8-May-09	N/A	$19.86	$51.83	$11.05
RWM	PSHRT RUSSELL2000	$57.80	126,765	$59.41	$57.62	8-May-09	N/A	$65.57	$79.87	$59.86
RSW	RYDEX INVERSE 2X 	$90.05	125,484	$93.21	$89.85	8-May-09	N/A	$111.49	$132.18	$94.44
GLL	PROSHARES ULTRASH	$15.91	115,517	$16.30	$15.87	8-May-09	N/A	$16.56	$17.96	$16.14
RRZ	RYDEX INVERSE 2X 	$63.62	92,871	$67.51	$63.49	8-May-09	N/A	$83.42	$109.52	$68.36
SDD	ULTRASHORT SMALLC	$45.41	87,179	$48.23	$45.26	8-May-09	N/A	$61.30	$86.38	$48.83
EUM	PROSHARES SHR MSC	$55.11	80,813	$56.43	$55.11	8-May-09	N/A	$65.32	$84.93	$57.18
SDP	ULTRASHORT UTILIT	$40.24	65,878	$40.60	$38.82	8-May-09	N/A	$45.91	$58.46	$41.69
SCC	ULTRASHORT CONSUM	$61.81	62,905	$63.82	$61.14	8-May-09	N/A	$74.68	$106.71	$63.34
SIJ	ULTRASHORT INDUST	$41.23	34,555	$43.35	$39.62	8-May-09	N/A	$56.82	$83.03	$43.88
DPK	DEVELOPED MKTS BE	$36.25	33,356	$39.30	$35.99	8-May-09	N/A	$57.80	$75.05	$41.44
SJH	PST ULTSHT RSL2K 	$47.04	23,760	$50.40	$47.04	8-May-09	N/A	$64.41	$93.10	$51.76
SKK	PST ULSHT RSL2K G	$39.47	22,162	$41.25	$39.34	8-May-09	N/A	$50.64	$84.94	$41.76
REC	RYDEX ETF TRUST	$7.70	22,050	$8.09	$7.70	8-May-09	N/A	$10.50	$39.42	$8.60
SFK	PST ULSHT RSL1K G	$59.60	15,779	$60.96	$59.01	8-May-09	N/A	$70.34	$96.02	$61.50
RXD	ULTRASHORT HEALTH	$56.39	15,410	$56.83	$55.80	8-May-09	N/A	$62.79	$75.12	$57.40
DDG	PROSHARES SHORT	$59.36	14,226	$60.22	$53.61	8-May-09	N/A	$67.47	$79.14	$60.92
SBB	SHORT SMALLCAP600	$50.39	13,749	$51.80	$50.39	8-May-09	N/A	$57.87	$73.25	$52.24
DGZ	DB GOLD SHORT ETN	$24.74	12,801	$25.03	$24.73	8-May-09	N/A	$25.14	$26.78	$24.91
SZK	ULTRASHORT CONSUM	$68.96	12,260	$69.78	$68.35	8-May-09	N/A	$78.90	$88.79	$70.55
EFZ	PROSHARES SHORT M	$76.15	10,980	$77.85	$75.98	8-May-09	N/A	$87.73	$99.36	$79.61
SJF	PST ULSHT RSL1K V	$81.51	10,610	$85.48	$81.40	8-May-09	N/A	$108.30	$126.68	$87.34
EWV	PROSHARES US MSCI	$62.14	8,514	$66.19	$62.03	8-May-09	N/A	$75.82	$90.45	$67.19
SDK	PST ULSHT RSL MC 	$46.86	5,900	$48.57	$46.55	8-May-09	N/A	$59.38	$99.54	$48.95
RMS	RYDEX INVERSE 2X 	$53.40	4,940	$55.59	$52.90	8-May-09	N/A	$0.00	$0.00	$55.98
SJL	PST ULSHT RSL MC 	$53.00	4,340	$55.30	$53.00	8-May-09	N/A	$72.52	$112.85	$57.21
DOY	MACROSHARES OIL D	$7.95	4,070	$8.05	$7.80	8-May-09	N/A	$7.97	$8.19	$8.00
AGA	DB AGRI DBL SHRT 	$39.93	3,243	$41.03	$39.36	8-May-09	N/A	$46.94	$48.58	$42.87
RHO	RYDEX ETF TRUST	$53.27	2,200	$53.40	$53.27	8-May-09	N/A	$59.69	$67.93	$57.00
DDP	DB COMMODTY SHRT 	$44.47	2,100	$44.85	$44.47	8-May-09	N/A	$47.61	$45.93	$45.66
DEE	DB COMMODITY DS E	$70.90	1,632	$72.46	$70.90	8-May-09	N/A	$81.17	$76.58	$73.47
RTW	RYDEX ETF TRUST	$34.76	1,000	$35.79	$34.76	8-May-09	N/A	$38.09	$72.88	$35.20
TLL	PROSHARES TRUST	$30.85	325	$30.85	$30.85	8-May-09	N/A	$37.17	$64.69	$30.85
CMD	PRSHS ULTRASHT DJ	$22.61	100	$22.61	$22.61	8-May-09	N/A	$26.56	$28.58	$22.78
PTD	E-TRACS UBS SHRT 	$36.00	0	N/A	N/A	7-May-09	N/A	$36.03	$38.00	$36.00
ADE	ELEMENTS AUSTRALI	$6.75	0	N/A	N/A	17-Nov-08	N/A	$6.75	$7.35	$6.75
ADZ	DB AGRICUL SHORT 	$32.83	0	N/A	N/A	7-May-09	N/A	$35.93	$36.29	$32.83

[greghaught]

with futures contracts, there's no NAV rot (caused by things like fund fees) and you can fine tune your leverage. there's no margin loan interest. and you can just as easily short as go long.

but if you don't know exactly what you're doing, then you're just a big accident looking for a place to happen.

[freddyv]

I thought I'd post an update to this topic since it appears that we have exended this rally about all it can be extended and while the various leveraged short ETF's can certainly fall further on a market rally at this point the upside potential is staggering on any meaningful drop.

I have been holding and building positions in SDS and SRS for awhile now (obviously early) and even at having taken a loss so far I am now in a tremendous position if we have indeed seen the top. I follow Richard Russell, Gene Inger and Tim Wood and all three seem to be about as sure as can be that this rally is ready for a setback if not an outright commencement of the mighty bear. These are three smart men with varied approaches and when they all agree on market direction I pay attention. BTW, all of them called the March rally pretty closely and Russell was dead on so these are not perma bears.

Be careful with these leveraged ETFs, you need to play lightly with the understanding that there is great risk and you can easily lose it all. They are great as a hedge, however.

--Fred

[steveA]

Freddyv is right about leveraged (inverse) ETFs having great risk. You can’t just hold them all the way down. This 40% rise would have handed you an 80% loss!

So if you had put $100,000 into an inverse 2X ETF back in Oct 2007 and tripled your money to $300,000 holding on to until Mar 2009, the 40% rise we just had would have reduced your account to $60,000. You’ve got to get out of these things at the bottoms.

They’re also deadly during up and down movements. Suppose you put $100,000 into an inverse 2X when the underlying index is 1000. The index then falls to 800 and then goes back to 1000. The 20% fall gave you a 40% gain so you got $140,000. But the 25% rise gave you a 50% loss and you’re down to $70,000 – even though the index is back to where it started.

I would rather get into something that paid off according to where the index is, rather than the path it took to get there – like an option.

Future contracts sound interesting. Can anyone recommend a good source of information. I always wondered why the Fed chose future contracts to manipulate the market, and why they had such a huge effect on the SPX price.

[greghaught]

Future contracts sound interesting. Can anyone recommend a good source of information.

http://www.cmegroup.com/education/

i dont trade fundamentals. i'm not smart enough for that. i content myself with what's actually happening and just take a little piece when something is moving or from a tradable's behavioral tics. my average trade duration is under 2 days. but i'm not intraday.

it's generally accepted that 90% of futures traders end up quitting as losers. any trading methods that you find in books or magazines are therefore suspect. those are what the 90% use. the 10% just don't reveal profitable methods to their trading counterparts. it wouldn't make much sense for Phil Jackson to sell his game strategies to the opposing teams.

i'm not a CTA so i can't give you any more than this ...

1) read the major system books (like Perry Kaufman's) and magazines (like Futures) to find out what the 90% are doing (the people you will be trading against).

2)get a TA (technical analysis) charting package and EOD (end of day) data to start with.

3)use your imagination and creativity to find new ways (that you haven't seen in any books or magazines) to use the indicators and start back testing and paper trading your ideas.

4)if you find something that is consistently a major loser, you may have gotten very lucky. find out what happens if you 'fade' it i.e. test the opposite. some very profitable methods are counter intuitive.

5)don't trade for real unless you're sure that you're one of the 10% and you have enough money to survive what's called the 'mathematical risk of ruin'.

6)if trading's not just a trivial accounting exercise for you, if you cant trade without emotion, then you shouldn't be trading.

7)don't trade until it's just costing you too much money to not be trading.

[steveA]

i dont trade fundamentals. i'm not smart enough for that. i content myself with what's actually happening and just take a little piece when something is moving or from a tradable's behavioral tics. my average trade duration is under 2 days. but i'm not intraday.

I feel just the opposite. I'm not smart enough to trade. “An inch ahead is darkness.”

I'm confident that the general S&P direction is down, but it's frustrating to have thought that, been right, and still lost money because of the peculiarities of the investment vehicle I chose.

[cody]

In my opinion the market is going to go up for a while then go down. But I could be wrong. I trade all options in a more or less market neutral strategy. I have been looking at leverage ETFs especially the triple leverage ones, in my opinion they will just take your money, If you want directional leverage you are far better off with futures or options. With the new margining rules on them makes them less capitol efficient. I guess they want you to lose even more money or lose slower.