Sunday, May 10, 2009

Beware Commodity Index Funds

Many commodity funds are really ETN's, or exchange traded notes, which carry more risk than equity funds. This is an excellent article at Seeking Alpha about the inherent risks of using commodity ETF's for investments:
Commodity Funds: The Good, Bad, and the Ugly

Monday, April 20, 2009

Short ETFs Soar on Monday 4.20.09

Monday, 4.20.09: Dow -290 (3.6%)@7841, Nas -65 (3.9%)@1608, SP500 -37 (4.3%)@832

Apparently fear moved back into the financial sector Monday after the BAC earnings report. All the leverage short funds showed monster one day gains.

Here are just some of the short ETFs gains for today:
FAZ +30.7% (financials)
TZA +15.3% (R2000)
EDZ +14.7% (Emerging mkts)
MWN +13.9% (Midcap)
ERY +13.6% (Energy)
DPK +13% (Developed mkts)
BGZ +12.4% (R1000)
TYP +8.6% (Technology)

The long funds saw corresponding losses, FAS -30%, TNA -15%, EDC -15.3%, etc..

New 3x ETFs from Direxion

Direxion continues to issue more 3x ETFs. Some of their listed symbols aren't trading yet, however, so here's the lastest list of those that are trading currently, as of 4.20.09

Large Cap: BGU (long), BGZ (short)
Small Cap: TNA (long), TZA (short)
Financials: FAS (long), FAZ (short) - huge volume lately
Energy: ERX (long), ERY (short)
Technology: TYH (long), TYP (short)

[Newer funds]
Mid Cap: MWN (short) - MWJ appears to not be trading
Emerging Markets: EDC (long), EDZ (short)
Developed Markets: DZK( long), DPK (short)

Just equity funds for now, the bond funds are giving me errors and don't interest me anyway. Giving someone money (a bond) seems not only insane these days, but will also not give the same possible gains as the 3x stock funds. FAS/FAZ routinely move 10-40% in a single day. If you don't want this much risk, stick with 1x funds, which have been around since the 40's. (zzzz...)

Sunday, April 12, 2009

ETFs and Market Explode Up on Wells EPS on 4.09.09

Thursday, 4.09.09 - Dow: +246(3.1%)@8083, SP500:+31(3.8%)@857, Nasdaq:+62(3.9%)@1653

These are the changes in % for these ETF's on "Wells Thursday", when financials exploded higher and led the market with them due to Wells Fargo's dramatic EPS report.

Index Chg
DIA 3.22%
SPY 3.97%
QQQQ 3.10%
IWM 5.86%
MDY 5.26%
2x Indx
DDM 5.96%
SSO 7.87%
QLD 5.99%
MVV 10.67%
SAA 11.90%
UWM 10.90%
3x Long
BGU 11.73% (R1000)
ERX 7.51% (Energy)
FAS 40.71% (Financials)
TNA 16.44% (R2000)

UYM 9.11%
UGE 2.85%
UCC 5.27%
UYG 23.84%
RXL 1.31%
UXI 11.39%
DIG 4.73%
URE 24.64%
USD 9.51%
ROM 6.13%
UPW 0.30%

EWA 3.89%
EWO 2.37%
EWK 2.08%
EWZ 5.20%
EWC 4.47%
ECH 2.97%
GXC 4.11%
EWQ 2.13%
EWG 2.57%
EWH 2.98%
EWI 1.42%
EWJ 3.67%
KF 6.72%
EWM 2.15%
EWW 5.94%
EWN 1.36%
RSX 6.14%
EWS 4.50%
EZA 2.39%
EWY 6.55%
EWP 3.60%
EWD 2.82%
EWL 1.68%
EWT 4.45%
TF 2.66%
TKF 5.42%
EWU 2.59%
FXI 4.39%
GCH 4.65%
IAF 0.43%
EFA 2.67%

Int'l - Regions
EFA 2.67%
EEM 4.37%
ILF 5.26%
EWJ 3.67%
FXI 4.39%

GLD -0.35%
SLV 0.26%
DGG 0.82%
UGL -0.85%
AGQ 0.60%
UCD 3.11%
UCO 7.49%
AGA -1.28%
DXO 6.98%
UUP 0.39%

DOG -3.18%
SH -3.90%
PSQ -3.06%
RWM -5.45%
MYY -5.33%
2x Index
DXD -6.45%
SDS -7.86%
QID -6.13%
MZZ -10.49%
SDD -12.09%
TWM -11.29%
3x Short
BGZ -11.74%
EDZ -12.76%
ERY -7.15%
FAZ -41.20%
TZA -16.05%

Sectors Short
SMN -9.79%
SZK -2.86%
SCC -5.35%
SKF -26.71%
RXD -2.25%
SIJ -10.84%
DUG -5.55%
SRS -23.96%
SSG -9.23%
REW -6.35%
SDP -0.57%

Int'l - Short
EFZ -3.30%
EFU -5.34%
EEV -9.20%
EWV -7.97%
FXP -8.74%

2x Commodity
DZZ 0.38%
GLL 0.69%
ZSL -0.62%
CMD -2.61%
SCO -8.48%
DAG 0.57%
DTO -8.27%
UDN -0.47%

Saturday, April 11, 2009

Country Funds

EWA = Australia
EWO = Austria
EWK = Belgium
EWZ = Brazil
EWC = Canada
ECH = Chile
GXC = China (Spider)
EWQ = France
EWG = Germany
EWH = Hong Kong
EWI = Italy
EWJ = Japan
KF = Korea
EWM = Malaysia
EWW = Mexico
EWN = Netherlands
RSX = Russia
EWS = Singapore
EZA = South Africa
EWY = South Korea
EWP = Spain
EWD = Sweden
EWL = Switzerland
EWT = Taiwan
TF = Thailand
TKF = Turkey
EWU = United Kingdom

FXI = Shanghai (Index)
GCH = Greater China Fund
IAF = First Australia Fund
JPP = Japan Prime (Spider)

Monday, March 23, 2009

Leveraged ETFs Explode With Market Monday 3-23

Monday 3/23/09: Dow +497 (6.8%)@7776, S&P +54 (7.1%)@823, Nasdaq +98 (6.8%)@1556

Well, we got confirmation that the market buys into the new government plan to deal with toxic assets. Did you see some of the gains in the leveraged funds today?

The 3x ones from Direxion: FAS +41%, TNA +26%, ERX +23%, BGU +22%

Some of the 2x ones from ProShares: URE +30% (SRS -30%), UYG +25% (SKF -30%), UVT +18%, UWM +17%, UYM +12%

You're now getting maximum benefit of these funds without having to worry about individual stock picking.

Disclosure: currently long FAS (financials) and ERX (energy stocks)

Saturday, March 14, 2009

How to Use ETFs in Your Portfolio

ETF stands for Exchange Traded Fund. Rather than a traditional mutual fund, these are funds that are on a stock exhange that look, work, and trade like stocks. Some represent a basket of stocks, some mirror an index by trading futures in that index, while some may short stocks or futures. There are several advantages with ETFs over traditional mutual funds:

  • They trade instantly, no waiting for the day’s closing price at 4 p.m.
  • You can buy or sell them with limit orders and have stop loss orders there to protect your investment from a large drop
  • Many are offered that give you double or triple the underlying index value’s daily change, so you have additional leverage with your money
  • Many allow you to short either a market index or a stock sector
  • You can buy them in an IRA or 401k and thus can short stocks that way, benefitting from falling prices with a rising price in the short ETF. You cannot short stocks in a retirement account, because if they move against you (up), you would owe additional funds.
  • You can use a sector specific ETF to hedge stock positions and have corresponding sell orders in place in all positions

Traditional mutual funds don’t allow any of these, you can’t have a preset sell price (stop loss), you can’t buy at a specific price, you don’t get the immediate value when you buy or sell. On top of the mechanics of trading them, traditional funds will usually cost more in fees when you get out than an ETF will, which will trade at the cost of a stock’s trade commission. On Black Monday in 1987, when the market plunged at the open, those who sold mutual funds had to wait until the 4 p.m. prices, which was at the day’s lows, down over 20% on average for that day alone. People, like me, who sold stock at the open had their cash immediately and avoided the day’s plunge.

You can use ETFs for various investment purposes:

  • You can use them for investing rather than trying to pick individual stocks
  • You can buy into or short an entire sector, such as financials, with one trade
  • You can use them to hedge stock positions, such as using a financial short ETF to protect a long position in financial stocks, or a short index ETF to protect all your long positions at once
  • You can buy the ‘market’ with an SP500 fund, or short the ‘market’ the same way
  • You can lessen your risk because there’s no chance of bankruptcy or a bad earnings forecast such as may occur with individual stocks
  • They allow beginners to safely learn how to trade while remaining diversified without having to analyze individual stocks

ETFs have succeeded because of all these advantages. Most now trade millions of shares per day, and I would avoid those that still trade below 100,000 shares daily, which is called liquidity. For beginning investors, these offer the safest way to learn how to trade the stock market with the least risk. Simply buy a long or short S&P500 or Dow 30 fund, put in a stop loss order to protect yourself from a big loss, and you have easily started down the road to safer investing.

As Featured On EzineArticles

Friday, March 13, 2009

10 Most Common Stock Trading Mistakes

I've aggressively traded the market since the advent of electronic trading in the late 1980's. I've made more than my share of mistakes and have too often witnessed these from amateur investors. In today's market, you have to be flexible and move fast, or you won't be trading very long.

The 10 most common trading mistakes that amateur investors make:

1. Buy and Hold - this simply does not work any more, even if you're going to hold a decade or longer. Some stocks have returned to 1930 levels recently, like Ford, GM, and GE.

2. Holding Losers Too Long - even pros have losing trades; the best attitude is that the 'first loss is the smallest' and to go ahead and take a loss when you're getting uncomfortable with it, say 5-10%. This can be done automatically with a stop loss order placed as soon as you buy a stock that will cause it to be sold if it falls a certain amount. Through experience I like a 5% stop, but 10% for some of the new ETFs.

3. Buying Too Many Stocks - most people hear that they need to diversify, then proceed to buy 10-25 stocks 'to be safe'. The best way to diversify is to buy an exchange traded fund (ETF) that represents a basket of stocks and you have instant diversification. I've found the best amount of stocks to own is 3-10, only a few in bear or difficult markets, and only 10 in raging bull markets. As long as some of these are ETFs, you're diversified.

4. Buying with Market Orders - learn how to use and buy with limit orders, or a top limit that you will pay for a stock. Otherwise, you may be the chump that bought at the high of the day just after the market opens when a market-maker takes advantage of your order. I've seen prices jump from 15 to 18 for one order, then come back down to 15 again!

5. Buying Stocks at the Open - the first half-hour to hour of market trading is the worst time in the day to buy stocks. Orders pile up overnight from people who trade after work, from Asians, then Europeans. So when the market is in a rally, these are usually buy orders and the market often opens higher, then dips after these initial orders are processed. It's best to buy after the first hour or during the lunch hour. It's said that 'amateurs trade the open, pros trade the close'.

6. Buying Hot Tips - rarely will you hear the proverbial 'hot tip' that turns into one. What you'll hear more often is unsubstantiated rumors, bogus stories, sometimes downright fraudulent attempts to move a stock. Always fully research these stocks before buying them, and get opinions from numerous sources. There have even been scams online where people faked valid news agency articles about a stock, causing rapid price movement and prison!

7. Buying Companies You Like - most people like Apple stock because they like iPods or iPhones, Disney because they like the movies, or Wal-Mart stock because they like cheap goods; all would have lost money for recent investors, some for a whole decade. Often by the time the public buys a stock, the easy money has been made by the pros and insiders, and the public is left 'holding the bag'. It's better to buy less-known companies that market pros like.

8. Buying Stocks That Analysts Like - this is also often bogus information you're hearing. Analysts quite often are simply 'talking their book', they want the public to buy a stock so they can sell out at higher prices. They may also want to drive a price down to buy in at lower prices - you can never really ascertain their motivation, so be skeptical.

9. Averaging Down if a Stock Falls - this is buying more of a stock as it falls, and 'averaging down your break even price per share'. Its awfully tempting if its a good company; the price will come back, won't it? So you double up and now have twice as much money at risk in a falling stock. After the stock falls 50-90% you have multiplied your original loss, and pros call this 'throwing good money after bad'. It's the equivalent of doubling up your bets in Vegas until you finally win! Average up, but never down, as a stock that falls 50% from 100 to 50 now has to go up 100% to get back to 'even'.

10. Buying Cheap Stocks - many think they can buy a penny stock that goes to a dollar and they make several thousand percent on this trade, which will pay for many losers. This is their confidence game, the lure of 'lottery winners', but it's a losers' game. Over a decade, 80% of all public stocks will go bankrupt, and guess where the majority are in price? Yep, under a dollar, which is where they have to fall before going to zero. Cheap does not often mean 'bargain' in the stock market.

There are probably hundreds of other valid tips available for both investors or traders, and I'll include more here. The important factor for all is preservation of capital, or you won't have anything to invest, so keep your losses minimal and you're on the way to stock market profits.

"Return of principal is more important than return on principal." - Will Rogers

Monday, March 2, 2009

ProShares Leveraged Currency Funds

ProShares Leveraged Currency Funds
Each is 200% of the index or its inverse if short

Euros: UltraLong(ULE), UltraShort(EUO)

Yen: UltraLong(YCL), UltraShort(YCS)

these funds also allow wagering! -- the Jman

ETF Deathwatch

The investing site Invest With an Edge has a good ETF section, and I like this feature they have, called Deathwatch, where they keep tabs on ETF's doing less than 100k in trades per day.
ETF Deathwatch

This is a good site to bookmark, they have good info in different sections.

Sunday, February 15, 2009

Total 08 Returns for Short ETFs

Exchange Traded Short Funds
Total Returns for 2008 (with dividends)


Index Tot08ret
DOG 31.12%
SH 39.28%
PSQ 46.42%
RWM 26.23%
MYY 15.80%

2x Index
DXD 47.07%
SDS 62.16%
QID 77.78%
MZZ 51.00%
SDD 29.56%
TWM 61.74%


2x Sectors
SMN 61.82%
SZK 47.94%
SCC 39.54%
SKF 3.67%
RXD 35.29%
SIJ 82.06%
DUG -7.62%
SRS -51.82%
SSG 110.36%
REW 96.56%
SDP 43.54%

Next post we'll have the international and country funds, and the year-to-date 2009 performances. - Jman

Total 08 Returns for Long ETFs

These are the total returns for 2008 for the long ETFs for indices, sectors, a few international regions, with dividends added in.

Long Exchange Traded Funds
2008 Total Returns


Stock Index ETFs
DIA -32.02%
SPY -36.45%
QQQQ -41.66%
IWM -34.44%
MDY -36.24%

2x Index Longs
DDM -61.37%
SSO -67.60%
QLD -72.87%
MVV -67.45%
SAA -62.01%
UWM -66.72%


2x Sector Longs
UYM -78.15%
UGE -51.00%
UCC -60.57%
UYG -84.69%
RXL -47.65%
UXI -69.99%
DIG -69.72%
URE -79.16%
USD -79.44%
ROM -73.24%
UPW -58.30%

EFA -42.17%
EEM -49.14%
ILF -68.16%
EWJ -26.90%
FXI -49.40%

Later, we'll post the returns for the short ETFs, and all the international / country funds.

Wednesday, February 4, 2009

New 3x ETFs Provide More Movement

There are now some 3x leveraged funds (called "Direxion") available.
Here are the sectors they cover:

BGU = Ultra Long Large Cap (Russell 1000)
BGZ = Ultra Short Large Cap (Russell 1000)

TNA = Ultra Long Small Cap (Russell 2000)
TZA = Ultra Short Small Cap (Russell 2000)

FAS = Ultra Long Financials
FAZ = Ultra Short Financials

ERX = Ultra Long Energy
ERY = Ultra Short Energy

By 2009, now trading in the millions of shares daily.

Can 5x and 10x funds be far behind? Who needs futures?.. Jman

Tuesday, January 13, 2009

Leveraged Commodity Funds from ProShares

ProShares Leveraged Commodity Funds
Each is 200% of the index or its inverse if short

UGL = Ultra Long Gold
GLL = Ultra Short Gold

AGQ = Ultra Long Silver
ZSL = Ultra Short Silver

UCD = Ultra DJ-AIG Commodity
CMD = Ultra Short DJ-AIG Commodity

UCO = Ultra Long Crude Oil
SCO = Ultra Short Crude Oil

In this case, wagering allowed! -- the Jman

Saturday, January 10, 2009

Crude oil ETF trackers

Here are some new ETFs whose goal is to more closely track the price of oil:

Crude Oil Double Short ETN (NYSE Arca): DTO
Crude Oil Short ETN (NYSE Arca): SZO

Crude Oil Double Long ETN (NYSE Arca): DXO
Crude Oil Long ETN (NYSE Arca): OLO

Friday, January 9, 2009

Leveraged Gold Funds

Two new 2x gold ETF's:

Double Long = DGP
Double Short = DZZ

Saturday, January 3, 2009

Ag Sector Funds

Four new Deutsche Bank Ag funds, out in April 08:

Long Agriculture: AGF
Double Long Ag: DAG

Short Agriculture: ADZ
Double Short Ag: AGA

Sunday, November 16, 2008

Ultrashort ETF 5-day and 4-week Change

Ultra-short ETF’s – Prices through Friday 11.14.08
(Showing first 5 day % change, then 4-wk % chg)

Chg/5day, Chg/4wk
DXD, 8.40%, -4.13%
SDS, 9.58%, 2.18%
QID, 13.11%, 11.36%
MZZ, 14.41%, 9.51%
SDD, 17.21%, 19.08%
TWM, 17.02%, 15.16%
EFU, 12.63%, -4.90%
EEV, 3.67%, -33.29%
EWV, 7.38%, -13.89%
FXP, -8.70%, -33.63%
SMN, 13.68%, 18.88%
SZK, 9.06%, 6.33%
SCC, 14.85%, 9.12%
SKF, 19.69%, 21.99%
RXD, 2.73%, 2.38%
SIJ, 12.24%, 11.84%
DUG, 0.53%, -28.65%
SRS, 30.80%, 27.12%
SSG, 17.21%, 19.98%
REW, 16.19%, 22.27%
SDP, -0.23%, -17.16%
AGA, -0.39%, 2.97%
DTO, 11.22%, 40.66%
Long GOLD: GLD, 0.97%, -5.19%
Dollar Bullish: UUP, 1.06%, 5.23%

(Data are believed to be accurate, but all humanoid activity is prone to error... so, "no wagering" - El Presidente)

Monday, September 29, 2008

Ultrashort Funds on No B.O. Monday

Well, the Dow fell 777 pts today, the Nas 199 pts, when the House failed to pass the "Bailout Bill"... (hey, maybe we can do without credit for awhile, just put that house purchase on hold and rent!)

Here are just today's gains in some ultrashort funds:
DXD (Dow) +11.5%
SDS (SP) 14.7%
QID (Nas) 19.95%
MZZ (Midcap) 14.4%
SDD (Smallcap) 12.1%
TWM (Russell 2000) 14.4%

EEV (Emerg. mkts) +24.1%
FXP (China) +29%
EFU (EAFE) 15.4%
EWV (Japan) 14.5%

SMN (Bas. matrls) 20.3%
SZK (Cons. goods) 6.2%
SCC (Cons. svcs) 12.5%
SKF (Fincls) 18.7%
RXD (Healthcare) 7.1%
SIJ (Industrls) 11.8%
DUG (Oil/gas) 18.6%
SRS (Real est) 8.3%
SSG (Semicond.) 18.3%
REW (Tech) 14.3%
SDK (Utils) 9.1%

Monday, May 12, 2008

Major Stock Index Funds

Simple Stock Index Funds
DIA = Dow 30
SPY = S&P 500
QQQQ = Nasdaq 100
IWM = Russell 2000
MDY = S&P Midcap 400
OEF = S&P 100

Short Index Funds
DOG = Short Dow30
SH = Short SP500
PSQ = Short Nasdaq100
MYY = Short SP Midcap400
SBB = Short SP Smallcap600
RWM = Short Russell 2000

Tuesday, April 15, 2008

New Solar ETF: TAN

Today the new Claymore solar ETF started trading, symbol TAN. It represents 25 solar stocks. The fund opened at 25.84, closed at 25.98 on 98k shares, so kind of a slow start. Now we need an ultrashort version of this, I suggest a symbol of BURN!

Have fun in the sun, but don't get burned... use protection!

Monday, March 31, 2008

US Index and International Funds - 1st Qtr Results

First Quarter 2008 Performance





ECH.......+13.69% < Chile
EWW.......+10.67% < Mexico
EWD........+2.91% < Sweden
EWL........+1.65% < Switzerland
EWT.......+12.97% < Taiwan
TF.........+1.77% < Thailand
ILF........+4.94% < Latin Fund

Metal and Commodity Funds - 1st Qtr 2008 Results



Currency Funds - 1st Qtr 2008 Results



Foreign Currencies
FXA.........+4.36% Australia
FXB.........-0.21% British Lb
FXC.........-3.14% Canadian dollar
FXE.........+8.12% Euro
FXF........+14.22% Swiss Franc
FXM.........+2.64% Mexico
FXS.........+7.00% Sweden
FXY........+11.87% Yen

U.S. Dollar Funds
UDN.........+6.93% (dollar bear)
UUP.........-5.49% (dollar bull)

DBV.........-6.44% (G10 basket)

Sunday, March 30, 2008

Commodity and Currency ETF Performance for 2008, Fri 3.28.08

Commodity and Metals Funds for 2008

GLD 7.93%
IAU 7.91%
SLV 17.03%
SLX 7.20%
DBP 8.55%
DBS 15.12%
DGL 6.88%
AvMt +10.09%
COW -12.27%
CUT -11.11%
DBA 8.73%
DBC 12.80%
DBO 9.11%
GAZ 25.41%
GSG 9.13%
IGE -4.50%
JJG 5.08%
KOL 5.16%
MOO 48.93%
RJA 2.95%
UNG 25.80%
USL 8.38%
USO 9.13%
UCR 2.03%
DCR -5.85%
AvCm +8.17%
PHO -7.29%
CGW -8.02%
PIO -8.53%
FIW -2.51%
AvWtr -6.59%

Currency Funds for 2008

FXA 4.74%
FXB 0.26%
FXC -2.76%
FXE 8.27%
FXF 13.93%
FXM 2.13%
FXS 7.04%
FXY 12.47%
UDN 7.24%
DBV -5.83%
UUP -5.65%
AvCur 4.75%
Note: UUP is long US dollars and was removed from the avg, so the difference between the two (long US vs long foreign avg) is 10.4%