Skip to main content

ETF Update: Short and leveraged ETFs

The markets did well yesterday, up 379 points. Impressive breadth across the board. The Wall Street Journal has a great data center for Etfs. The ETF Gainers, Decliners and Most Actives data column is pretty good, its updated throughout the day and you do not need a subscription to get the information.

Yesterday's big market day had ETF funds lit up with huge market moves especially in leveraged ETFs.
ProShares funds had a huge day yesterday on the leveraged side. ProShares, if you are unfamiliar with this fund group, is one of the largest short and leveraged ETF family of funds in the world. Of course, many of their short funds were down but the leveraged funds (finally) did better. The Proshares Ultra Financials (UYG), 52 week % change - 92.61% and ProShares Ultra S&P 500 (SSO), 52 week % change -73.21% finally got a break and is up 4.23% and 2.03% respectively today. Now, I am not advocating that now is the time to buy into these two funds. I still think a wait and see approach is still necessary. Yesterday's rally could be a bear market rally.

What should you be buying? I still like
ProShares UltraShort Financials (SKF), current asking price is $178.43. Going short may still be a good idea even though financials have been beaten down unmercilessly; $5k of a 100k portfolio (5%) may be a good investment at this time in this fund. Be careful though, like yesterday, the markets can reverse quickly and wipe out any gains you may have gained. Don't forget to set stops on your purchases.

Comments

Popular posts from this blog

Morning Update

By Rick Walter Still working on putting together a strong biotech portfolio. Here is a good general article on the state of the biotech industry that was posted yesterday on the online Wall Street Journal's site- Biotech Stocks Hot Right Now, Ho-Hum in the Long Run.

Portfolio Update

By Rick Walter I have posted a new Biotechnology portfolio . It's total return as of November 25, 2009 is 3.4%. However, to download and use it you will have to subscribe to the portfolio, of course. On an important note, I consider each portfolio to be well diversified in its particular sector but I've recently decided to add stock futures and options positions to each portfolio which will increase each portfolio's return but lower the risks going forward.

Whose lending?

Troubled times ahead for everyone it seems. Credit markets still seems to be troubled. The Federal Reserve stands willing to provide liquidity to the markets although modestly. If I was running a pretty profitable business and I needed capital now, could I rely on my existing banking relationship to provide me the capital now? Here is an article in the WSJ on "Prior Loans, Future Pain?" Link . This article is free, no subscription needed . I guess the answer might be how much you need and the terms, but wouldn't you feel slighted if you had a banking relationship with your banker for lets say 10 years and you asked your banker to increase your credit line by about an additional 40% and they said no. In this scenario, with all things being equal, of good personal credit and business scores, pretty robust industry growth projections, and business debt to credit ratio of 1.20 or better. What would be the reason(s) for a bank decline? I called and left a message to a banker...