R. Scott Raynovich

The 'Reflation' Top Ten Portfolio

LOL. raytayzmd, how do you really feel? Well, you made the 7% back easy in the last two weeks. I will look at JGG but yield always has its cost. I like Blackrock because they have a government franchise now in the "Bailout Bucks" and are likely to have "very good information." But everybody should do their own due diligence.



On Jan 07 11:44 AM raytayzmd wrote:

> ...BNA????...BNA is a CEF trading at par with its NAV and yielding
> less than 7% with an expense ratio somewhere around 4%...you consider
> that worthy of a top ten list???...compare JGG trading at a discount
> of 11%, yielding 10%, and with an expense ratio of 1% and pretty
> much holding the same stuff as BNA...pardon me if I don't hire you
> as a financial advisor.

The 'Reflation' Top Ten Portfolio

Interesting stuff, thanks. I did not realize double inverse short FXI is actually "double inverse only 120% short FXI."

I can see with these ETFs there is a lot of room with shenanigas. The bid/ask is often very wide, and even intraday, they are not good vehicles to trade because they can be out of whack with the index.

Unfortunately, I can't think of many other ways to advocate shorting treasuries, though. I short the futures, but that requires futures trading skills and you will also lose money on the slippage and the rolling of the futures contract. So is there ever a perfect system? You could also short TLT but my guess is that would take even more capital than TBT and it would be hard to make money.


On Jan 07 12:00 PM Geoffrey Lordi wrote:

> Hello, Rayno,
>
> My point re: ProShares etfs is that they are designed for very short
> term applications and do not definitively track 2:1 or 1:2 over the
> long term, even after accounting for fees. For example, I'm currently
> comparing SSO:SPY. At 11.41AM, SSO is down just shy of 100% more
> than SPY, which makes sense since SSO is an S&P Ultra etf...However,
> because of the options-strategy based manner which motivates SSO,
> if the S&P is up 2.1% this month, I cannot expect that SSO will
> be up 4.2%; similarly, if the S&P is up 6.2% at year end, I cannot
> expect 12.4% gains (even without considering fees) from SSO. Sometimes
> this works out for the better (overshot gain performance), sometimes
> not (vastly undershot performance). A prime case to support the former
> situation is SDS' one month performance: +5.69% vs the S&P's
> +5.05%.
>
> Here are some examples that led folks astray over the last *year*:
>
>
> FXI (China) down 47%, but its double-inverse FXP short down 58%;
>
> EEM (emerging mkts) down 47%, its double-inv EEV down 38%;
> IJR (Russell 2000) down 28.3%, TWM down 22.4%.
>
> But...
> SPY down 35.1% and SDS up 16.4%;
> XLU down 30.5% and SDP up 15%...
>
> There are other examples - some where the ProShares funds have overperformed:
> some where the opposite is true.* And while some folks would gladly
> take unexpected overperformance, we should be wise to realize that
> it *isn't* unexpected. After all, ProShares said it best on their
> website:
>
> "ProShares are designed to meet daily objectives; results over longer
> periods may differ."
>
> * These comparisons valid between 11AM and 12PM on Jan 7.
>
> Don't get me wrong - I enjoyed your article. I just ask that you
> don't expect 2:1 *for sure* on your TBT strategy.
>
> Take care,
> Geoff L
>
>

The 'Reflation' Top Ten Portfolio

Geoffrey -- not sure what you mean, could you explain?

I am holding fairly long term. I assume if the Bond goes down over time, this would go up -- whether it's 1 day or six months, yeah?

I am also shorting treasury futures, which are a more expedient vehicle (but with leverage needs to be watched very closely).


On Jan 07 09:48 AM Geoffrey Lordi wrote:

> Considering that the ProShares double inverse vehicles yield that
> double inverse *only per day* (and not per week, month, or year),
> should we assume that you are only holding TBT on certain days? After
> all, there've been countless examples of what happens to these vehicles
> when they're not held as intended: for the extremely short term.
> (Disclosure: we've held SSO, DXD, FXP, and EEV.)

The 'Reflation' Top Ten Portfolio

Thanks Greg. I agree Silver coins are cumbersome. But I like them and collect them anyway. You can do better with collectibles. In fact, old Morgan Silver dollars hold their value very well. In fact some Carson City coins have average 11% annual gains for the last 100 years! A few of them are worth $500+ each.


On Jan 07 09:44 AM Greg Pinelli wrote:

> Certainly more forward thinking than "tomorrow will be just like
> today only worse" deflationist crowd. Especially like the double
> short on treasuries...TBT..hard to imagine anyone is going to think
> their money is "safe" when inflation is back up to 7-8% and they're
> getting 1-2%.
> Gold coins are excellent..silver are not..cumbersome and except for
> junk carry 35%+++ premiums....