You're Kidding

Distressing Details of the UltraShorts

I see I made errors above for not seeing that double inverse of -1% is +1% and not +2.

I got it.

Distressing Details of the UltraShorts

Last October I bought 3 double inverse, index ETFs (QID, SDS, SKK) with a small portion of my portfolio (the rest was in cash,) splitting my investment equally between them. I was convinced the market was going down big time. I bought without doing much of any due diligence and just assumed that I could hold them for the short to medium term and do really well if my instincts were correct.

I sold them in January, just under 3mo later, when they were way down and I couldn't stand it any longer, even though the plan was to keep them until the market really tanked later in the year.

Afterwords, I thought I would check out how well they had tracked their indexes. The Nasdaq 100 was down less than 1% so I should have been up about 2%. Instead I was down over 18%. The Russell 2000 was down 2.4% so I should have been up about 5%. Instead I was down 33%. And the S&P 500 was up 3.6%, so I should have been down about 7%. Instead I was down 33% again.

My total loss was about 28% of my investment: about $8600.

I have barely a decent size retirement, which I will be ok with, but only if I stop blowing money like this.

I suspect there are many others out there who have, are right now, or who will be, burned by these "investments." I speak from a prejudiced point of view, obviously, but I think it is unconscionable for these instruments to be sold without making it obvious to the buyers what they really are. Based on what I am reading, this is not what the companies that are pushing these products are doing.

But then again, maybe I shouldn't expect that at all. After the scummy revelations we have all seen of what the financial industry really seems to be, perhaps I am just naive and need to grow up.

Well, I just got a nice bee sting and I hope I have learned my lesson. But ya know, investing is risky, and its bad enough as it is without having to worry about getting ripped off by some scumbag's greedy financial engineering wet dream. But on the other hand, there are a lot of folks who have been stung far worse than I have, so I'll quit whining.

Tomorrow is another day.