4 ms·

If one wants to capture some short term gains, go for LABU (3x IBB). A perfect example of the fleecing of the muppets I'm talking about. IBB one year performan

If one wants to capture some short term gains, go for LABU (3x IBB). A perfect example of the fleecing of the muppets I'm talking about. IBB one year performance is $114 -> $106. In the same timeframe LABU $65 -> $20. How does the SEC allow that? It's fucking disgusting. The only way to "win" with ETFs like that is to short them, short them, and short them again. Edit: sorry. Didn't emphasize the obvious, real, way to "win" with ETFs like that. You create them and sell them to muppets. Billy Ray figured this out pretty quickly in Trading Places: Mortimer Duke: Tell him the good part. Randolph Duke: The good part, William, is that, no matter whether our clients make money or lose money, Duke & Duke get the commissions. Mortimer Duke: Well? What do you think, Valentine? Billy Ray: Sounds to me like you guys a couple of bookies. Randolph Duke: [chuckling, patting Billy Ray on the back] I told you he'd understand.

smabie 7y ago
I mean, look at UPRO (3x levered bull S&P 500 ETF). From inception (2009) to date it's returned 1000% compared to the S&P 500's 170%. And from inception to Feb it's returned 3300%. I've personally held UPRO from 2014 until late January and have made a truckload of money off of it. I then made a truckload more money buying VIX futures before the VIX spiked to over 80. People say that you shouldn't hold these things long-term, but that's simply not true. All you're doing with leverage is increasing your beta. Obtaining 2x leverage on the S&P 500 is going to look pretty much the same as buying stocks in the S&P 500 with a beta of 2. Yet no one complains about high beta stocks being a scam. You're telling me you would short UPRO? If you shorted UPRO pretty much anytime between 2009 and the beginning of 2020, you would have lost either all of your money, or in the best case, most of your money.
- PhantomGremlin 7y ago
  Excellent market strategy and timing! I wouldn't short any chart that moves from the lower left -> upper right. The ones I mentioned previously do the opposite. Their chart goes from the upper left -> lower right. Still, timing is so important. If you had gone long UPRO on Feb 18, you would have seen $80 -> $24 in about 6 weeks. Losing 70% of your money would be a little unsettling. You're obviously one of the "big boys". Most people don't dare play in VIX futures, because of the intrinsic high leverage and because of the high volatility. Wouldn't it be less risky to trade VIX options instead? I don't follow either closely, I'm genuinely asking.
  - smabie 7y ago
    Yeah, totally, you can really lose your lunch with VIX futures (both going long or short). It's a dangerous game, I wouldn't really recommend it to anyone. I manage a small/moderate amount of money for friends and family as well as myself (in a different account), and the kind of plays I do for them are very different than what I do for myself (if I lost all of my money I would be fine, it I lost all of their money I don't think I'd be able to live with myself). While I do use leverage in my family and friends fund, it's never above 1.5x, while with my own money I usually run between 2.5-3.25x. I myself don't touch options because I feel like I don't have a good academic grasp of them. I work in portfolio analytics for equities and futures, so those are pretty much the only things I hold in both my family and friends fund (actually in that fund it's just ETFs) and my own personal fund. Would options have been the better risk/reward play? Probably/maybe, but it's never a good idea to invest in things you don't have a complete understanding of. The ultimate point I'm making about leveraged ETFs I guess is that people have different risk tolerances. Just accepting whatever the market gives you rarely makes sense as the return to vol ratio is probably either higher or lower than your personal risk tolerance. My risk tolerance is very high, so I invest in ways that align with it, yours might be low, so likewise, invest accordingly. But don't just take whatever the market throws at you.

smabie 7y ago

I mean, look at UPRO (3x levered bull S&P 500 ETF). From inception (2009) to date it's returned 1000% compared to the S&P 500's 170%. And from inception to Feb it's returned 3300%. I've personally held UPRO from 2014 until late January and have made a truckload of money off of it. I then made a truckload more money buying VIX futures before the VIX spiked to over 80. People say that you shouldn't hold these things long-term, but that's simply not true. All you're doing with leverage is increasing your beta. Obtaining 2x leverage on the S&P 500 is going to look pretty much the same as buying stocks in the S&P 500 with a beta of 2. Yet no one complains about high beta stocks being a scam. You're telling me you would short UPRO? If you shorted UPRO pretty much anytime between 2009 and the beginning of 2020, you would have lost either all of your money, or in the best case, most of your money.

PhantomGremlin 7y ago
Excellent market strategy and timing! I wouldn't short any chart that moves from the lower left -> upper right. The ones I mentioned previously do the opposite. Their chart goes from the upper left -> lower right. Still, timing is so important. If you had gone long UPRO on Feb 18, you would have seen $80 -> $24 in about 6 weeks. Losing 70% of your money would be a little unsettling. You're obviously one of the "big boys". Most people don't dare play in VIX futures, because of the intrinsic high leverage and because of the high volatility. Wouldn't it be less risky to trade VIX options instead? I don't follow either closely, I'm genuinely asking.
- smabie 7y ago
  Yeah, totally, you can really lose your lunch with VIX futures (both going long or short). It's a dangerous game, I wouldn't really recommend it to anyone. I manage a small/moderate amount of money for friends and family as well as myself (in a different account), and the kind of plays I do for them are very different than what I do for myself (if I lost all of my money I would be fine, it I lost all of their money I don't think I'd be able to live with myself). While I do use leverage in my family and friends fund, it's never above 1.5x, while with my own money I usually run between 2.5-3.25x. I myself don't touch options because I feel like I don't have a good academic grasp of them. I work in portfolio analytics for equities and futures, so those are pretty much the only things I hold in both my family and friends fund (actually in that fund it's just ETFs) and my own personal fund. Would options have been the better risk/reward play? Probably/maybe, but it's never a good idea to invest in things you don't have a complete understanding of. The ultimate point I'm making about leveraged ETFs I guess is that people have different risk tolerances. Just accepting whatever the market gives you rarely makes sense as the return to vol ratio is probably either higher or lower than your personal risk tolerance. My risk tolerance is very high, so I invest in ways that align with it, yours might be low, so likewise, invest accordingly. But don't just take whatever the market throws at you.