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  • RTSA: Another Day, Another iPath Early Termination [View article]
    Hi Ron,
    I read the Prospectus at your suggestion and have to admit you are right. BXDC shouldn't have a daily reset. Probably it's the only inverse leverage ETF w/o the daily reset left on the market. Even BXDB that you suggested doesn't trade any longer.
    BXDC liquidity is problematic.
    Any better suggestion to avoid a daily reset in the leverage ETF/ETN?
    Nov 5, 2012. 05:20 PM | Likes Like |Link to Comment
  • RTSA: Another Day, Another iPath Early Termination [View article]
    Yahoo! Finance is my source. The profile quotes is below.
    The "daily performance" is a reference to a daily reset.
    If you have access to the prospectus, please refer me or quote.
    The investment seeks to replicate, net of expenses, the inverse of the daily performance of the S&P 500 Total Return index.

    The investment seeks to replicate, net of expenses, twice the inverse of the daily performance of the S&P 500 Total Return index.
    Oct 17, 2012. 06:20 PM | Likes Like |Link to Comment
  • RTSA: Another Day, Another iPath Early Termination [View article]
    Both, BXDB and BXDC, have a daily reset in them.
    Any other suggestion?
    It looks like HDGE, suggested by MWinMD is inverse without a daily reset but it's not leveraged and 3% MER is too high.
    If anyone is familiar with an inverse leveraged ETF/ETN, similar to what RTSA and the iPath family used to be, please let me know.
    Oct 15, 2012. 11:15 AM | Likes Like |Link to Comment
  • RTSA: Another Day, Another iPath Early Termination [View article]
    Hi Ron,
    Sadly, RTSA was terminated at the worse time imaginable.
    Do you know if there is any Short ETF left without a daily reset?
    I couldn't find any.
    Oct 14, 2012. 09:39 PM | Likes Like |Link to Comment
  • Pro-Dex: Are Stories Of Its Death Greatly Exaggerated? [View article]
    Hey Frank, that was an excellent analysis but too generic and too theoretical to my test. All ratios and margins make sense when applied to a representative sample of data. Here the situation is rather either too good or too bad and everything can change overnight, simply because the company has just too few accounts. You can forget about margins and throw out the PE if the biggest customer is gone.
    From the management prospective, if CEO can handle cutting off $4.5 million of R&D all at once and putting VP's of sales, BD and the entire sales team on a strict diet of the commission only payments, then the company has a chance. If CEO chooses to play nice, the company will be gone on a blink of an eye regardless of the cash reserves.
    That was bad news.
    Nonetheless, if the company loses 45% of its revenue, it will bring it back to the year 2002 when the revenue was $10.5 mln. The stock price averaged $2.26 at 2002. It seems that now with the price of $2.46, the loss of the revenue is priced in already.
    It feels more like a casino at this point in time with a 50/50 chances to survive. It's been on the market since 1978 and still is struggling to gain business. Why should this year be any better than 33 previous years?
    It'd be safe to assume that if the company couldn't gain business during the years of prosperity, it's unlikely for the company to succeed while we are or around the recession/depression (pick one). I would prefer to see the revenue first before buying into it. That's the only way to avoid a value trap.
    Jan 3, 2012. 01:43 AM | Likes Like |Link to Comment
  • Canadian Housing: Another Debt-Fueled Bubble? [View article]
    Happy New Year and thank you for your response.
    Nonetheless, the corner stone of our discussion is in regards with the way that China influences the Canadian real estate market.
    You suggest that the Chinese economy growth increases the demand for Canadian products. In other words, you advocate the increased export of the Canadian goods. It should have been associated with low unemployment and steady economy growth. Is it so?
    On the contrary, I suggest that the Chinese $$$ make it to the Canadian real estate market directly being "imported" by the mainland expatriates shopping on the real estate markets in Toronto and, especially in Vancouver as it's the first stop on their way to a new life.
    I believe that "tracing" the capital effect back from the real estate markets with staggering growth will answer the question. What particular industry would explain the unexplainable real estate prices in Vancouver? or Why is Calgary real estate is far behind during the recovery phase while it's a hub for a major Canadian oil suppliers? Shouldn't it be the other way around following your reasoning?
    The answer is simple and primitive to my taste. The capital from China is being imported in suit cases by the Chinese the nouveau riche wave. It trickles down to the rest of the society getting to the service industries first.
    Therefore, expect the real estate prices and unemployment to be high both at the same time as long as Chinese manage to drive the economy forward. Moreover, I would expect even the further rise of the real estate prices in Toronto and Vancouver while Chinese yuan is inevitably strengthening. It gives even more purchasing power to the new Canadians.
    I just sold my house in Toronto. You should have seen who stopped by for showings. As a practical experiment to find out who is right, I suggest to visit any sales office of any new condo in Toronto or Vancouver just to see who's wondering around ready to jump in.
    Jan 5, 2011. 09:07 AM | 1 Like Like |Link to Comment
  • Canadian Housing: Another Debt-Fueled Bubble? [View article]
    That's a good post and an excellent discussion.
    The three major points to be considered:
    1. The level of the prices in TO and Vancouver,
    2. The directions of the the price change.
    3. The rate of the price change.
    The affordability index is the best indicator of the price level sustainability. It obviously absorbs the employment, prices and the interest rate. And it doesn't favor the current price level.
    But it's being confused by the involvement of the foreign (Chinese) buyers.
    There used to be say "If the US sneezes Canada catches cold." It's no longer relevant. If it were true the Canadian economy must have been dead a 4 years ago when CAD dollars went from 1.5 for the US dollar to 1.0. But the death announcement turned to be premature. The emerging market support came right on time. Canada essentially decoupled with the US and "coupled" with China. The Chinese demand for resources supported the economy and the Chinese real estate bubble provided a stream of wealthy buyers for the Canadian megacities.
    So you wanna know what is going to happen to the prices in TO and Vancouver, look no further but the conditions on the Chinese real estate market.
    The Canadian mortgage regulatory system wasn't better or worse than the US one, it was more conservative. It required to have CMHC insurance for LTV < 20%. And it was enough to prevent the the bubble. It also exposed tight requirements to existing and prospective insurers. The Canadian is a funny market relative to the US. There are just 5 major banks and there are just 2 mortgage insurers, CMHC and Genworth (a branch of GM). AIG wanted to make it to Canada but...oops! Too late.
    So the point is bubble or no bubble, slow price deflation or a crash will depend on the conditions on the Chinese market rather than the Canadian economy itself.
    Dec 6, 2010. 10:38 AM | 1 Like Like |Link to Comment
  • Five Facts Every Investor Should Know About Leveraged ETFs [View article]
    Great post! Congrats!
    I just wanted to add that there are leveraged ETN's without a reset. Barclays Capital Launched Leveraged Exchange Traded Notes tracking SP500 on November 18, 2009. The issue date is important since the math works so that it leverages relative to the issue date. So instance BXDD (ETN+ Short D linked to the S&P 500 Total Return Index) will return 3x reverse gain/loss of the index based on it's value on November 18, 2009. If someone buys BXDD later the return won't be 3x but something close.
    BXUB is corresponding 3x long SP500 Launched the very same day.
    Does it make sense to buy into these ETN's? Yes for these folks who have no margin available for any reason. Otherwise, trading on margin will return exactly the same result as buying these ETN's. So it doesn't take any special skills to replicate.
    I'm not sure but doubt these product will be marginable with any broker given to the risk. Therefore, buying these ETN's will be equal to buying/selling on margin.
    In a nutshell, the mantra is in order to get rid of the daily reset devastating effect, just buy on margin and hold to it as long as it makes sense. Simple, effective and cheap since there is no MER involved.
    As far as the leveraged products with reset are concerned, they are very close to short term options. Though many of them have substantially better liquidity and way smaller bid/ask spreads. So the dilemma is similar - would you buy a long-term option knowing that it's value is going to shrink even if the underlying price stays flat? one would probably buy it only to hedge or to boost short term expectations.
    Nov 4, 2010. 07:30 AM | Likes Like |Link to Comment
  • Arena's Lorcaserin: What Now? [View article]
    Bye-bye ARNA!
    See you at $0.30's :-)
    Sep 22, 2010. 04:31 PM | 1 Like Like |Link to Comment
  • Arena's Lorcaserin: What Now? [View article]
    That's true. but putting together a probability-weighted average as a price estimate requires to take into consideration as many scenarios as possible. What kind of probability is assigned to each scenario is a matter of a personal belief.
    Some people don't like or trust books. But it doesn't hurt to get to know what is in there.
    My favorite joke is a question:
    - How to get to know when the management is lying?
    - Their lips are moving.
    Sep 19, 2010. 01:25 PM | Likes Like |Link to Comment
  • Arena's Lorcaserin: What Now? [View article]
    Since your approach to Drug player is different from mine and based more on the knowledge of the industry rather than, I'd be very interested to hear your opinion on some Pharma players going totally nuts to my taste.
    Can I write you?
    Sep 18, 2010. 12:16 PM | 2 Likes Like |Link to Comment
  • Arena's Lorcaserin: What Now? [View article]
    Do you know the difference between a chemists and an accountant?
    A chemists never opens the "books" :-)

    By the books Arena has $234,850,000 assets and $157,184,000 liabilities and $66,161,000 tangible assets overall while the number of shares outstanding is 112.35M.
    Conclusion #1 is if the company liquidated it's not that "shareholders are left with nothing" but $0.59 per share for a starter.
    Now, if you defined a target price one way or another and it turned to be on an upside, it means you estimate a gain potential.
    The next question is what is ARNA continues to slide down. How far? How long? And can you hold the punch? Averaging down is a great technique if you have an unlimited supply of cash.
    The company is trading at 3.5 Price/Book. I would guess the company spending $110,000,000 a year with only $100,000,000 liquid cash left, should trade at 0.5 P/B. Therefore, the conclusion #2 is ARNA may fall down to $0.29. In other words, ARNA has at least another 85% to lose.
    So I would probably wait till ARNA lands closer to $0.29 and then start thinking.

    Sep 18, 2010. 11:23 AM | 4 Likes Like |Link to Comment