SA2

ETF Update: Bearish Dollar, Biofuel ETFs, Gold and Silver ETFs

User 86999: "While I'm sure of the rightness of buying commodities, the associated taxation nightmare in the shape of K-1 being handed to the investors/traders at the end of the year with some phantom incomes (which may exceed the actual gains made, if any at all) is a serious drawback. Anyone interested in commodities, currencies, collectibles (like gold), needs to be aware of these taxation issues to fully understand the baggage associated."

I would like to second your comment: I was caught comletely unaware of the K-1 complexities (associated with DGL, DBA, DBV, etc..) - not only did I have to pay for tax consultation fees to submit it correctly to the IRS but I ended up paying taxes for money that other people made!

Buyer beware.

Bear Market Rally ETFs: Is Capitulation Close?

Interesting and well thought-out analysis!

Thank you for sharing.

Two Investment Areas That Could Benefit from an Obama Presidency

Question:

If MBIA and Ambac are going to be selling large amounts of Muni bonds why is that "another short term reason why muni bonds are attractive"?

Guru Returns Show Just How Tough the Going Has Been Lately

Archman80211:
"The true test of an asset manager is how they preserve wealth during bear markets." - absolutely agreed!

As for Morningstar - that is a shameful outfit that protects its income stream by creating this glorified "guru" culture and pushing unknowing people to invest in yesterday's "top performers" while it is absolutely clear that a portfolio of inexpensive index funds / ETFs will do a far superior job of growing and protecting the interests of the people seeking Morningstar's advise. Morningstar will rate the funds with stars based mainly (only?) on their past performance promoting a culture of rear-view-mirror expensive investing.

Shameful indeed.

IEZ: Oil Equipment and Services Profits Dependent on Rising Crude Prices

One important point not mentioned above is that the entire group is very inexpensive with a trailing PE of less than 14. That PE is based on much lower oil prices... Reduces risk.

The Dollar and the Currency Carry Trade

Beware!

DBV has some very nasty tax implications including, but not limited to having to submit a K1 form to the IRS.

I held it for a while, made no gain and had to pay taxes as if I made a significant amount of profit.

SA.

Comparing Commodity ETFs/ETNs

Beware! the tax implications of the DB funds are severe and unexpected.

I lost a lot of money on DBA and DGL due to this unexpected surprise.

Looking forward to your clarification on this point in the next post.

Thanks,
SA.

Six Ways to Trade Foreign Currencies

Thank you Ray for the very informative analysis and your comment about tax implications.

I learned this the hard way - I held DBV and DBA in a taxable account for a short period in 2007 and sold for no gain. At the end of the year I got a K-1 form which was difficult for me to report correctly and the worst of it was I was allocated and taxed for earnings that I did not make. Very frustrating. I will not touch these future-based funds again and from your comment I gather that this is a problem with all ETNs. Buyer beware.

As per your comment the Rydex/Wisdom Tree ETFs seem better, the interest will be taxed as regular income but at list I will only be taxed for money I actually receive and will not need to deal with a K-1 form.

SA2.

17 Commodity ETFs to Hedge Your Portfolio

Just one note of caution: the future-based ETFs (all DB funds) are very tax unfriendly - at the end of the year you will receive a complicated K-1 form which may require you to pay taxes for someone else's gains (as I received for short trips to nowhere in 2007 with DBV, DGL and DBA) - beware!

Six Ways to Trade Foreign Currencies

What about the tax implications if held in a taxable account?

Thank you.