Jim Fellows

U.S. States Should Hedge Their Oil

On further examination, you both seem to have looked at it a bit more carefully. However, I really think that the cost of carry will kill any value in hedging.

U.S. States Should Hedge Their Oil

Have you fellas ever heard of contango? It seems not. Hedging ain't cheap these days.

We Need ETF-Based Hedge Funds

Why not just do this with a mutual fund open end or closed, or a seperate account? There are almost no good offerings for average investors in the long short / sort of category. And from your description of the strategy, it seems quite workable without opening a hedge fund.

Using ETFs to Beat the Market with Lower Risk

5 Years isn't long term? The levered fund was down 8% or so while the market was up. What sort of rotation other than correct market timing, selling the levered fund when markets were flat, going down, or overly volitile, would have lead you to outperform?

Bill, could you point me to a way to put on this trade that did not involve market timing, and leads consistent above market returns?

I don't dispute the usefulness of levered funds. But they are not long term holds. I bought SSO last Thursday afternoon, and blew out Tuesday morning.

Another example, this week was very volatile. SSO was up only a very small fraction more than SPY. Nowhere near twice as much. So 5 years, 5 days, a losing strategy. At the same time, I used SSO quite effectively over a three day period recently.

Using ETFs to Beat the Market with Lower Risk

I have oft seen this sort of insanity tossed about. It is amazing no one bothers to back test it to see if it works.

Here are some returns to think about. Open end funds are used to avoid tracking error issues.

PTTAX Pimco Total Return 5 year annualized 3.96%

ULPIX Pro Funds UltraBull 5 year annualized -8.24%

VFINX Vanguard S&P Ind 5 year annualized -0.31%

From what I can see, you lose more money with leverage and bonds. Leverage costs money, and shouldn't be used unless you know you are right enough to cover the cost.