Back to Direxion 3x Superleveraged ETF's
Khan Academy has unwittingly convinced me to deploy a good bit of risk capital into FAS, the 3x financial bear ETF provided by Direxion. In fact, I may put my entire Roth IRA into it. Why? Well, I know a little about politics. And when a bad plan comes along, politicians usually go for it. And what's a worse plan than taking taxpayer dollars and Fed loans and giving them to irresponsible bankers?
So the combined odds of this not passing, or of it passing in a form that gyps shareholders, or of bank CEO's managing to kill shareholders despite this sweet deal, or a collapse of the derivatives markets crushing the leveraged ETF's faster than we anticipate, together constitute about 50%, more or less. So FAS has about a 50% chance of suffering a big hit in the short term. On the other side of the coin, it's almost a 50% chance that FAS will do better than triple in a couple of months as people figure out just how much "Tiny" Tim Geithner is shoveling into the banks' coffers and FAS cashes in their C, BAC, JPM, and MS call options.
Could get wiped out, but if I don't make some serious dough in my Roth, it won't be worth anything anyway by the time I'm allowed to take the interest out (which is the only part with a chance of being large enough to be useful after the hyperinflation we're in for from 2011-20??).