Is a double-leverage ETF a good idea now? I tried to buy shares of the double leverage ProShare Financial ETF (Ticker: UYG) Basically, it does not double whatever the Dow Jones Financial Index does. If the index falls 1% of the fund is down 2%. The shares are down to around $ 3.20. Do you think now is the right time to buy? I do not know if it can go much lower quen he is and it seems that there is some possibility exists.
Well, I'm no expert, but considering the areas of financial information, I wouldnt touch it.
http://apps.finra.org/fundanalyzer/1/fa.aspx
In addition, see the link above for the cost of any ETF u want to try. It's a simulator.
I want to buy a long ETF generally, but not the finances, he is in total disorder. Perhaps the use of 5% of your capital to buy the ETF, but the finances are in a big mess and I can not see anyone who wants to buy their shares in the hope to reach a days a dividend value .... for the next 10 years.
Firstly, we can always go lower. Have you seen what happened to SIRI today? people thought it could not go any lower when it was still about $ 5.
secondly, the ETF does not exactly duplicate to "double" the index as most people think. read the prospectus. is twice the daily traffic.
it is a defect rather important. because it is twice the daily volatility is killing your potential returns. if it is the same way every day, you'll probably lose money - it's just the way math works.
It would be good for business but not good for investment.
Banks are a danger zone right now, the risks are: a) they can go bankrupt (I mean some not all) b) are at risk of mergers or acquisitions, while prices continued to drop c) They can get nationalized or division) of their shares will massively diluted with convertible bonds and the mobilization of additional capital.
All the above risks are very worrisome for the banking sector and if this occurs only one or two banks, then follow the indication that you will hurt.
You also have the counterparty risk of proposed actions and the possibility of lower prices. If proposed actions will bust (which was probably used to it) you probably will not lose all your investment, but you may lose some and the price index that will be your return, even if its most lower than what you put in.
If your fun with these questions, then it is a good way to play up (personally, I have a 2x leveraged oil ETCs), in my honest opinion.
Posted on February 10, 2010.
