Posts Tagged ‘ETF’
Smart Investing Daily – The Truth About ‘Leveraged ETFs’
Friday, 21 January 2011
Back in early October, after a visit to the Texas State Fair, I wrote about inflation and the global food “problem” and how you can take advantage. Every stock I mentioned in the report has seen substantial runs since then.
Keeping all of our greed under control, Sara recently detailed why commodities and the agri-stocks climbing with them needed a nap, and why maybe it was time to take profits.
What does this have to do with leveraged ETFs, you might be asking? Well, I thought I would use food as an intro, because it offers a great analogy for my views on leveraged ETFs (OK, and maybe I wanted to remind you how Smart Investing Daily keeps you ahead of the curve).
Both gluttony and greed are two of the “seven deadly sins,” but with food especially, some of us tend to eat more than we need to and with that, the very thing that brings us life and energy can also cause illness disease and death (in severe cases). I bring up these morbid reminders, not to scare you out of satisfying your hunger for food, but to remind (or inform) you that some investment vehicles (leveraged ETFs) might be just as unhealthy and perhaps even dangerous for your portfolio, forcing you to “eat” fees and expose yourself to risks you may not even be aware of. Too much of something Read more
From Smart Investing Daily – An Easy Way to Buy Real Gold in Your Brokerage Account
| An Easy Way to Buy Real Gold in Your Brokerage Account |
| Written by Jared Levy, Editor, Smart Investing Daily | |
| Friday, August 13, 2010 11:46 | |
 The second week of August is proving to be a volatile one for the equity markets. After the Federal Reserve’s extremely unexciting intention to begin using the proceeds from maturing mortgage bonds acquired during the crisis to maintain its holdings of domestic securities around $2 trillion, the financial markets didn’t seem to react positively. That action was more of a prevention of monetary tightening versus true monetary easing, which many economists and traders still believe the economy needs. When you couple this lack of action with Wednesday’s worse-than-expected trade balance number and a slowdown in Chinese factory production, you had a recipe for disaster! Of course to top it all off, weekly jobless claims jumped to 484,000, not good… The S&P 500 (SPY, SPX) index violated some key short-term bullish indicators this week, which is one of the reasons we saw that sharp drop on Wednesday, which in turn pushed the index into negative territory for the year. The financial market remains in a fairly bearish long-term trend being that the 200-day simple moving average (currently about 1,115) is still above the current price of the index. That same moving average will be upside resistance for the broad market and a level we must break out of if we are going to see a change in trend.
Many of your brokerage accounts have been taking a beating and if you just chicken out (like we all do sometimes) and put your money in the bank, you’ll be lucky to get 1%, which is actually costing you money when you consider the average inflation rate of 3%+ over the past 10 years. |
Why We “Geeky” Options Traders May Have an Edge over Stock Traders
by Jared Levy on July 1, 2010
When you think of stocks, you probably think of buy, sell, or hold when it comes to your investing choices.
When you take a position in a stock, it must move in your desired direction for you to be profitable.
Depending on your opinion toward a particular company, you are really limited as a stock trader to more of a full “on or off” sort of sentiment. Of course, you can choose to only allocate a certain percentage of your account to the trade (to manage your risk) or you can even diversify your portfolio to mitigate volatility and/or create a partial hedge in your account.
Here’s a diversification example:
The fact of the matter is that if you were to have bought ETFs in five different S&P 500 sectors in late April (April 28, to be specific), you would most likely have net losses in every one of your positions. Below you will see the price changes from April 28 through June 29, 2010 in these popular sector ETFs:
If you had allocated 20% of your account evenly into these 5 sectors, you would have a net loss of 13.2% over that time period. Individual stocks may have done better or worse, but ETFs may also in and of themselves offer another level of risk reduction through diversity.
By diversifying, this particular strategy helped to moderate the major losing trades, but also worsened the better…