David Hollinbeck

Three Types of Leverage for This Volatile Market

Leveraged ETFs are fine as long as you leg in to the position and buy more if it goes down. As the position advances set stops at reasonable levels and repeat this process as needed. Don't buy and hold for a long period of time.

Fixing the Leveraged ETF Mess

I understand the long term buy-and-hold issues and still, I trade SSO, UYG & QLD for periods of time depending on the trend. Using stops and buying more on a dip are helping me recoup the losses from 1H09. Also, I hold only 30% to a max of 50% in leveraged ETFs. So far it works for me.

Benefit from Ultra ETFs' Tracking Error

I understand what you are saying and agree with your point. The way I use these ETFs is to leg in to a position and buy more even if the ETF falls. This has worked quite well for me and can lead to rather spectacular results in a bear market recovery such as we are in now.

The Danger of Leveraged ETFs

Actually, I didn't mention short ETFs because I don't use them. I just sell the longs using stops and wait for a lower entry point. Obviously that's not going to work in a long bear market. I do plan to use a short ETF like SDS but cautiously.


On May 01 09:16 PM Alan Young wrote:

> Okay, I have a new insight now from this comment stream.
> Actually, it appears that the most common misconception is that long
> and short leverage have the same risks.
>
> Mr. Hollinbeck (above) looks at successful double-long investing
> and think it will work for double-shorts. Other people look at disastrous
> double-short boomerangs and make blanket statements about all leveraged
> funds.
>
> Both wrong, or at least likely to be wrong. Study the charts. Apply
> with caution.

The Danger of Leveraged ETFs

I don't agree with that. I have been using SSO and UYG for nearly a year and so I can speak from experience. They have performed very well for me recently. The first quarter was bad but I made over $20k in April alone. I don't buy and hold. I am an active trader so that is part of the secret to success because if you don't cut your losses the fact that a 5% loss followed by a 5% gain will result in a slight loss. However, I tend to limp in and if the ETF drops I will buy more so I can benefit from the eventual rise in the ETF. In this current environment I have found these leveraged ETFs to be very good. However, you do have to take profits quite often and cut losses.


On May 01 08:57 AM Jason Z wrote:

> Well, in the long run, all the 2X, 3X ETF will go to near zero, because
> the underlying instrument is options, not stocks, there is time decay.

Double and Triple Leveraged ETFs: For Traders, Not Investors

The fact is that these ETFs don't really behave the way you say they do. For example, consider UYG over the past five days. Chart UYG versus XLF and you will see that regardless of the ups and downs, today UYG finished ahead of XLF by more than 2X.

Besides, the way people really use these ETFs is to sell when performance lags or even buy more so that a simple analysis such as you presented isn't the way people (at least I) really use the ETFs.

Leveraged ETFs: Handle with Care

Another comment on long-term use of leveraged ETFs is that I will buy 20% more of the ETF when it does go down so that also tends to sweeten the returns over time. My experience has been very favorable toward using leveraged ETFs for long periods of time. I am currently long SSO and UYG.

Leveraged ETFs: Handle with Care

I have charted the SPY vs. SSO over a 3 month period and don't see the effect you are saying will happen. During this past 3 month period the SPY has gone down but recovered to the starting value on two occasions. On those occasions the SSO has also recovered to its starting value. So, I don't see the behavior you are predicting.

finance.yahoo.com/q/bc...

What am I missing?

Lesson Learned from Madoff's Ponzi Scheme

I think that's unfair. Many investors seem to be honest hard-working folks who were swindled. Madoff and probably several others need to spend the rest of their lives in jail.


On Jan 01 12:52 PM toobad41 wrote:

> Nice review of this ponzi scheme. I still can't believe these people
> fell for the scam. To put all of ones money in one basket is a cardinal
> sin for investors. But if they were all crooks they deserve their
> losses.

Lesson Learned from Madoff's Ponzi Scheme

None of your suggestions would have done an ounce of good. Madoff lied and fabricated the investments. The SEC should be held responsible since they have the authority and the expertise to confirm the actual details of the investments supposedly made. They could not confirm the reported investment gains so they "shrugged their shoulders" so to speak and walked away from their responsibility. More than one person has to be responsible for this horrible fraud and more than one person should be sent to prison.