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  • The Danger in Financial Stocks in 2009
    SKF should have been a great buy in a year when many financial stocks dropped 90% in value. But if you bought it a year ago and held it to today, you would be DOWN 5%. Unbelievable but true. The geometric compounding and internal inefficiencies of the ProShares ultras and especially ultrashorts make them unsuitable for anything but very short-term bets on market or segment direction.

    Examples, previously posted on other SA articles:

    Examples, 1/1-12/29/08:
    China: FXI and FXP are both down 50%.
    Oil industry: DUG and DIG are BOTH down, 25% and 75% respectively.
    Financials: UYG is down 85%, SKF is up 25%.
    Real estate: URE is down 80%, SRS is DOWN 45%.

    DOG (ProShares 1x short Dow 30) is up 20%, DXD (same except 2x) is only up 15%. The single-leverage did better than the double!

    These are not suitable vehicles for long-term trend bets. You can chart pairs and watch their cumulative intersection points sink farther and farther below 0%, even in 5 or 10 day charts. These ETFs are dangerous. Handle with care, if at all.

    ***
    Here's another one for you. Pull up a 3-month chart of FXI (1x long China) vs. FXP (2x short China). FXI is down about 3%. So you would expect FXP to be up, right? Wrong. FXP is DOWN about 68%.

    This is Russian roulette with 5 out of 6 chambers loaded.
    Jan 08 03:01 am |Rating: 0 0 |Link to Comment |View article
  • Last Thursday Was the Bottom - It's Time to Get Back in
    Yep, nice continuation of the rally today. What? Down 680? Well, tomorrow will be a better day, I'm sure.
    Dec 01 21:28 pm |Rating: 0 0 |Link to Comment |View article
  • Last Thursday Was the Bottom - It's Time to Get Back in
    "Looking at the current downturn, it makes sense that we would be at or near the bottom at this point in the cycle."

    No, that doesn't make sense.
    Nov 30 17:38 pm |Rating: +1 0 |Link to Comment |View article
  • What Are Some of the Best Hedge Fund Managers Doing?
    Aren't these positions as of September 30? A lot can change in nearly two months time.
    Nov 19 23:59 pm |Rating: 0 -1 |Link to Comment |View article
  • What Does Bank of America's Decline Mean for the Global Banking System?
    There are two things Bernanke and company cannot allow:
    * Deflation
    * Collapse of the banking system
    They will do whatever they think it takes to prevent these. Best guess would be more of the same medicine, massive doses of pseudo-money. I wonder if a patient can die from too much medicine?
    Nov 14 21:52 pm |Rating: 0 0 |Link to Comment |View article
  • History Suggests the Financial Bottom May Be Near
    In the tech bust of 2001+, Cisco stock lost 90% of its peak value. If you bought it when it was down 80%, you would have lost half your money.
    Sep 18 02:52 am |Rating: 0 0 |Link to Comment |View article
  • That Sucking Sound? It's FDIC Insurance Taking Over
    retrieve: Rarely have I seen anyone get so much wrong. Get the self-righteous hypocritical chip off your shoulder.
    Aug 17 22:57 pm |Rating: 0 0 |Link to Comment |View article
  • Financials To Resume Meltdown Momentarily
    OMG, two articles in a row by this guy. What did I do to deserve that.

    A piece of advice from an avocation I pursue: If you are a young man, grow a mustache. If you are old, lose weight.
    Aug 15 22:00 pm |Rating: 0 0 |Link to Comment |View article
  • Prime Mortgage Trouble Could Accelerate Bank Failures [Housing Tracker]
    “Wall Street is the villain in the thin