MichaelD's Comments RSS Syndication from SeekingAlpha.com http://seekingalpha.comuser/110428/comments http://seekingalpha.com/article/131503-must-know-info-for-investing-in-commercial-reits-if-you-dare?source=feed#comment-481600 481600 Tue, 28 Apr 2009 16:48:31 -0400 http://seekingalpha.com/article/99986-using-etfs-to-beat-the-market-with-lower-risk?source=feed#comment-283689 283689
As was noted, SSO doesn't track 2x SPY. There was a great article in Institutional Investor's ETF Seventh Anniversary publication. Basically, because leveraged funds adjust leverage every day, they do better in trending markets. So if SPY is on a sustained rise, SSO has to upward adjust leverage every day which amplifies returns. Similarly, if SSO is on a sustained fall SSO cuts leverage every day which dampens losses. SSO does worse, however, in range bound markets, because after a down day it lowers leverage, which hurts it when the markets rise the following day, for example.

So this approach doesn't really reduce short term risk in terms of daily volatility. It will lose you less money in a major crash because of the adjusting of leverage noted above.]]> Thu, 16 Oct 2008 11:36:55 -0400
As was noted, SSO doesn't track 2x SPY. There was a great article in Institutional Investor's ETF Seventh Anniversary publication. Basically, because leveraged funds adjust leverage every day, they do better in trending markets. So if SPY is on a sustained rise, SSO has to upward adjust leverage every day which amplifies returns. Similarly, if SSO is on a sustained fall SSO cuts leverage every day which dampens losses. SSO does worse, however, in range bound markets, because after a down day it lowers leverage, which hurts it when the markets rise the following day, for example.

So this approach doesn't really reduce short term risk in terms of daily volatility. It will lose you less money in a major crash because of the adjusting of leverage noted above.]]>