Once the S&P 500 hit 1568 Sthenelus Worldwide began to decrease our S&P 500 long positions and increase our S&P500 short positions. Over the past weeks we have been buying (NYSEARCA:SPXU) and selling (NYSEARCA:UPRO). These are the only positions we regularly trade and thus the only instruments we record as trading investments on our balance sheet.
We strictly believe that at any point in time you must have something in your portfolio that is increasing. We owned and continue to own UPRO. We like using trading leveraged equity ETFs when we believe the S&P 500 is going higher. Subsequently we like using trading inverse equity ETFs when we believe the S&P 500 is going down. Our timing is not perfect but the process achieves the results we are looking for. UPRO has allowed us to capitalize 3X on the increase in the S&P 500. Now as we believe the market is coming to a top we are decreasing our position in UPRO. With the ownership of UPRO we saw appreciation growth 3X the S&P 500 over the past few months of this year. Our return is less than the 32.69% return the ETF has generated year-to-date as of March 30, 2013.
As our upside S&P 500 level was reached we began to unwind the UPRO position and build up the SPXU position. The SPXU acts as cushion for us to help alleviate the downside. Being a trading inverse equity (3X) ETF this instrument should counteract the performance of the S&P 500.
As I have mentioned before, the Sthenelus Worldwide portfolio is conservative. The portfolio mostly is comprised of electric utilities, major drug manufacturers, pipelines, and major integrated oil and gas companies. For stability we own precious metals and net long and short positions.
We have to year over year earn enough to pay our creditors (3.50% APR) and still have the ability to pay for regular operations and turn a profit. We use the SPXU to decrease the decrease in our portfolio in a descending market. We use the UPRO to increase the increase in our portfolio in an ascending market. If Sthenelus Worldwide cannot pay back the creditor's interest and principal, we can be sued for breach of contract, and will deserve it.
I find the (UPRO) and (SPXU) ETFs and other instruments like them extremely risky and do not advise investing in these types of investments without fully understanding the risks and benefits of these types of instruments. We use them to decrease the descent and increase the ascension. In our opinion, there are trading instruments to be used with caution.
Disclosure: I am long SPXU.
Additional disclosure: I am selling UPRO and should unwind the position within 72 hours.