The ongoing financial turmoil and financial discussion thread - Page 66 - Calgarypuck Forums - The Unofficial Calgary Flames Fan Community

Slava · 08-26-2009, 10:03 AM

Quote:

Originally Posted by Tron_fdc

I've been reading some pretty interesting things on ETF's the last few days......and came across a pretty interesting article on shorting them.

http://ca.us.biz.yahoo.com/etfguide/...3_id.html?.v=1

It makes a pretty strong case that we're not out of the woods yet, and likely in for another correction.

I talked to a broker the other day who said "anything that falls out a window will likely bounce a few times" which made me chuckle.

Its an interesting article, but I would be careful. When you're shorting you can basically have an infinite loss, but not an infinite gain. The ETF's that give you the 2x down or up eliminate some of that risk, but there is a price that you pay for that as well. Basically the more volatile things get the worse the returns look, whether you bought the up or the down.

Pastiche · 08-26-2009, 10:14 AM

Quote:

Originally Posted by Tron_fdc

I've been reading some pretty interesting things on ETF's the last few days......and came across a pretty interesting article on shorting them.

http://ca.us.biz.yahoo.com/etfguide/...3_id.html?.v=1

It makes a pretty strong case that we're not out of the woods yet, and likely in for another correction.

I talked to a broker the other day who said "anything that falls out a window will likely bounce a few times" which made me chuckle.

Correct me if I'm wrong but I don't believer there are any short ETFs in Canada. At least, I'm going under the auspices that ishares is the only ETF offering for Canadians and they don't have any short options as part of their product list.

Slava · 08-26-2009, 10:16 AM

Quote:

Originally Posted by Pastiche

Correct me if I'm wrong but I don't believer there are any short ETFs in Canada. At least, I'm going under the auspices that ishares is the only ETF offering for Canadians and they don't have any short options as part of their product list.

Its not an exact short, but you can buy the 2X down ETFs from Horzons Beta Pro and they also have some inverse products.

macker · 08-26-2009, 11:57 AM

Quote:

Originally Posted by Slava

Its not an exact short, but you can buy the 2X down ETFs from Horzons Beta Pro and they also have some inverse products.

You could use these to make quick plays on Natural Gas which is at 7 year lows with HNU which is actually very heavily traded (57 Million)....with all the shale gas discoveries in the US I guess you could make a case for HND. Sentiment changes quickly on these kind of investments so you need to be able to get in and out quickly and have to follow every movement. Same goes for other beta pro products such as HOU or or HOD or the Gold bear and bull products....If you want to get your heart beating faster give them a try

They do have a place in a portfolio from time to time and I am thinking about dipping into HNU in the next few weeks....

Slava · 08-26-2009, 11:59 AM

Quote:

Originally Posted by macker

You could use these to make quick plays on Natural Gas which is at 7 year lows with HNU which is actually very heavily traded (57 Million)....with all the shale gas discoveries in the US I guess you could make a case for HND. Sentiment changes quickly on these kind of investments so you need to be able to get in and out quickly and have to follow every movement. Same goes for other beta pro products such as HOU or or HOD or the Gold bear and bull products....If you want to get your heart beating faster give them a try

They do have a place in a portfolio from time to time and I am thinking about dipping into HNU in the next few weeks....

I take it you are contrarian to the article in the papers this morning that says natural gas might drop to $1 then?

macker · 08-26-2009, 12:01 PM

Quote:

Originally Posted by Slava

I take it you are contrarian to the article in the papers this morning that says natural gas might drop to $1 then?

As I said with all the Shale Gas in the US who knows about the short term but you can definitely play off of the negative "newspaper" articles and public sentiment to make some short term fast money....There will be buying opportunities for bulls in the next few weeks. Watch for it...

Cowperson · 08-26-2009, 12:09 PM

Quote:

Originally Posted by macker

If you take the TSX for example the recovery has actually been steady. Relatively speaking it hasn't been too high too fast. Look at a 1 year chart http://investdb.theglobeandmail.com/..._listing=TSX-I The market obviously has a long way to go to get back to where it was 1 year ago. It is a slow and steady climb up the wall of worry...

Markets have recovered about 20% of the 50% downturn in Canada and that's probably a fair value since talk of "depression" has given way to talk of "end of recession."

To go back to where you were at the lowest moments would imply you would have to reconstruct the vast uncertainty and feeling of impending doom that existed at the time . . . . . good luck with that.

At the end of any bear market, there is a period of what I would call "easy money" where the mood suddenly changes and the first days are euphoric if not a little unbelievable.

We've gone through that period.

The headlines - the lagging indicators - are gradually starting to confirm what the leading indicator - the market - has been trying to say for the last five months.

It's also interesting that most global markets, in Canadian dollars, have provided negative returns this year, largely because of the Canadian dollar. If you weren't overloaded in Canada, you were behind the ball.

Cowperson

Slava · 08-26-2009, 12:13 PM

Quote:

Originally Posted by macker

As I said with all the Shale Gas in the US who knows about the short term but you can definitely play off of the negative "newspaper" articles and public sentiment to make some short term fast money....There will be buying opportunities for bulls in the next few weeks. Watch for it...

I agree there are definitely some buying opportunities in gas, no question there. I'm not sure if the way to play that is through an ETF that rebalances daily though.

macker · 08-26-2009, 12:26 PM

Quote:

Originally Posted by Slava

I agree there are definitely some buying opportunities in gas, no question there. I'm not sure if the way to play that is through an ETF that rebalances daily though.

That is why you have to get in and out quick though. Not a lot of better ways to play the changing sentiment in nat gas imo. As with every investment vehicle there are draw backs and the rebalancing is a draw back but how else would you play it? There is also the concern with some of these ETF's (gold in particular) about do they have enough gold to back the investments into the ETF's but that is an entirely different drawback/concern. I think the benefits outweigh the concerns but I agree ETF's are not for everyone....

Ryan Coke · 08-26-2009, 12:33 PM

Could one of you guys explain the 'rebalancing' part of that, and the potential downsides?

Slava · 08-26-2009, 12:35 PM

Quote:

Originally Posted by macker

That is why you have to get in and out quick though. Not a lot of better ways to play the changing sentiment in nat gas imo. As with every investment vehicle there are draw backs and the rebalancing is a draw back but how else would you play it? There is also the concern with some of these ETF's (gold in particular) about do they have enough gold to back the investments into the ETF's but that is an entirely different drawback/concern. I think the benefits outweigh the concerns but I agree ETF's are not for everyone....

But you also pay a transaction fee everytime you move in and out...that just chews away your gains. The HBP ETF's are also more of a derivative in my opinion. The gold ETF doesn't actually hold any gold for example. Instead these are all holding a basket of stocks and National Bank writes a contract for those stocks to be exchanged for two times the movement of whatever that fund is following.

Personally I think that if you think that gas is set for a run then find an excellent gas company and buy the shares. I realise that the base commodity is less volatile and can be less risky than owning a company out right, but to consider leveraged ETF's you really aren't too concerned about volatility in any event.

macker · 08-26-2009, 12:38 PM

Quote:

Originally Posted by Ryan Coke

Could one of you guys explain the 'rebalancing' part of that, and the potential downsides?

http://www.investopedia.com/rotate.a...eraged-etf.asp

The above explains why leveraged ETFs are more of a trading vehicle vs a long term investment because of the rebalancing....

macker · 08-26-2009, 12:44 PM

Quote:

Originally Posted by Slava

But you also pay a transaction fee everytime you move in and out...that just chews away your gains. The HBP ETF's are also more of a derivative in my opinion. The gold ETF doesn't actually hold any gold for example. Instead these are all holding a basket of stocks and National Bank writes a contract for those stocks to be exchanged for two times the movement of whatever that fund is following.

Personally I think that if you think that gas is set for a run then find an excellent gas company and buy the shares. I realise that the base commodity is less volatile and can be less risky than owning a company out right, but to consider leveraged ETF's you really aren't too concerned about volatility in any event.

True, but the ETFs are still a more pure play on gas. Take ECA for example where they hedge you wont benefit to the degree that you would in a leveraged ETF if you are playing momentum and looking to use sentiment to get in and out quick with more money out....

flamesfever · 08-26-2009, 12:59 PM

I think the first move to long term investment success should be to get rid of the "get rich overnight" mentality.

macker · 08-26-2009, 01:08 PM

Quote:

Originally Posted by flamesfever

I think the first move to long term investment success should be to get rid of the "get rich overnight" mentality.

Thanks Dad

Or limit your "get rich overnight" money to 5%-10% of your portfolio.
Mom always said everything in moderation right

bluejays · 08-31-2009, 05:57 PM

Bumping the thread. Seems the September slump came a day earlier today. I'm kinda leaning towards buying a few stocks soon (mostly O&G and some tech), just wondering what people's thoughts are with this early drop today?

bluejays · 09-02-2009, 05:03 PM

Double bump...because another day of red on the TSX. Let's get this things started again. Always some interesting discussions.

Wookie · 09-02-2009, 05:36 PM

Quote:

Originally Posted by fleury

Double bump...because another day of red on the TSX. Let's get this things started again. Always some interesting discussions.

TSX was 11 points in the green

Slava · 09-02-2009, 09:32 PM

I'll dive in here and say that if the job figures come out Friday morning and are worse than expected than its going to be ugly.

MJK · 09-02-2009, 09:38 PM

I am actually hoping the markets slide again becuase I have some cash lying around and have been waiting a couple months now to invest. I have been expecting the markets to come back down for awhile now and I think there will be some excellent opportunities to buy soon.

I have about 50% of my portfolio in oil stocks and have about 25% sitting in cash waiting for my opportunity to buy.

This is a question to the experts out there...how far can we expect the Dow to drop? Is it unrealistic to get it back down to 8000 at this point? It seems the days of 7000 are behind us for now.