User 52851's Comments RSS Syndication from SeekingAlpha.com http://seekingalpha.comuser/52851/comments http://seekingalpha.com/article/104718-triple-leverage-etfs-should-be-reserved-for-the-strongest-conviction?source=feed#comment-311268 311268

On Nov 17 11:20 PM Fatty wrote:

> User 52851 -- its not possible for it to go down more than 100%.
>
>
> So ideally, since its targeting the daily returns, the fund management
> should have some sort of constant rebalancing strategy in place.
> For small moves, a periodic rehedging using derivatives should allow
> them to maintain the approximate leverage ratio. However, as the
> underlying, targeted asset moves more, the fund will have to rehedge
> to readjust the leverage ratio.
>
> Basically, I think they would try to provide an "instantaneous&amp...
> 3x returning portfolio. In typical cases, a day-over-day portfolio
> value would match this. If they rehedged intraday, it would be from
> the point where the fund was rehedged that it would be "returning
> 3x".
>
> So for example, if the benchmark was up 30% and the 3x bear ETF was
> hedged at every 10% interval, the ETF would be down 30%, three times,
> or .70*.70*.70 = 44% of the fund would remain at the end of the day,
> so down 56%. Depending on what their rebalancing strategy was, it
> could lead to dramatically different end-of-day returns,]]> Thu, 20 Nov 2008 20:17:39 -0500

On Nov 17 11:20 PM Fatty wrote:

> User 52851 -- its not possible for it to go down more than 100%.
>
>
> So ideally, since its targeting the daily returns, the fund management
> should have some sort of constant rebalancing strategy in place.
> For small moves, a periodic rehedging using derivatives should allow
> them to maintain the approximate leverage ratio. However, as the
> underlying, targeted asset moves more, the fund will have to rehedge
> to readjust the leverage ratio.
>
> Basically, I think they would try to provide an "instantaneous&amp...
> 3x returning portfolio. In typical cases, a day-over-day portfolio
> value would match this. If they rehedged intraday, it would be from
> the point where the fund was rehedged that it would be "returning
> 3x".
>
> So for example, if the benchmark was up 30% and the 3x bear ETF was
> hedged at every 10% interval, the ETF would be down 30%, three times,
> or .70*.70*.70 = 44% of the fund would remain at the end of the day,
> so down 56%. Depending on what their rebalancing strategy was, it
> could lead to dramatically different end-of-day returns,]]> http://seekingalpha.com/article/104718-triple-leverage-etfs-should-be-reserved-for-the-strongest-conviction?source=feed#comment-300999 300999 Sun, 09 Nov 2008 04:23:20 -0500 http://seekingalpha.com/article/104718-triple-leverage-etfs-should-be-reserved-for-the-strongest-conviction?source=feed#comment-300998 300998 Sun, 09 Nov 2008 04:22:46 -0500 http://seekingalpha.com/article/104242-new-direxion-triple-leverage-funds-proceed-with-caution?source=feed#comment-300996 300996 Sun, 09 Nov 2008 04:04:50 -0500 http://seekingalpha.com/article/75570-direxion-files-for-36-new-funds-including-triple-leveraged-etfs?source=feed#comment-300994 300994 Sun, 09 Nov 2008 03:55:09 -0500