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Why I closed all my 2x short bets... So I could open them AGAIN!



November 11, 2009 – Comments (4) | RELATED TICKERS: SDS , TZA , TWM

here is a quick note:


I made the mistake of calling a top with levered 2x indexes as many CAPS players have. These products are now down 60-90% since march... Since I've alreadly lost > 50% being long these things I decided to close them today and re-open them today because I think this could be "a top"... I've been wrong before - but today was a good spot to try again for lots of technical reasons.

In my ideal world the market will fall fast and hard and I'll gain lots of CAPS points from the +20 2x INVERSE ETFs I green thumbed today.


if this turns out to be THE TOP then I could potentially make 60% to +100% on these levered ETFs and actually erase all my loses (longs have greater pct upside than shorts)....

additionally if the market falls and these etfs rise I'll get double the percentage gains in CAPS.


Basically I doubled down strategically today - and I have a theoretical chance to become a top 10% CAPS player if all goes my way.


Wish me luck - I'll need it.


FYI - in real life I recently re-entered my short of X and I am short AMZN - I closed out my Long of JACK.  My only current long is PACR (a piece of crap with a chance of being something someday)



2x levered ETFs are long-term garbage - they are guaranteed to end up lower in 2 years than they are now regardless of their underlying index - because the embedded costs and friction caused by trading options eats up the principal over time.  They are long-term worthless!


Levered ETFs are only worth using for short term bets - but that is like going to the casino.


I am long-term short all levered long etfs... because even if the market goes up forever these products will eventually end up at 0.


4 Comments – Post Your Own

#1) On November 11, 2009 at 4:39 PM, jason2713 (< 20) wrote:

I tried the 2x short game myself, lost 20% and gave up.  I'm glad I did.

Shorting this market with all the liquidity that is going on is hard to make money from.  Definitely gambling.

I thought about taking them on again since the dollar is at $1.50 vs the Euro and usually that marks a close top, but who the heck knows.  It could keep going.  The most you'll make in a day or two is 8-10%.  You have to gamble pretty large to make any notable money.

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#2) On November 11, 2009 at 4:41 PM, davejh23 (< 20) wrote:

The market will be down tomorrow.  I know this because I'm always wrong, and today I sold some shorts and added to long positions. 

I don't really care if they fall, b/c they're dividend stocks that I plan on holding forever, so I don't know if that negates the predictive ability of my trades.


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#3) On November 11, 2009 at 5:40 PM, nuf2bdangrus (< 20) wrote:

I've lost a fortune shorting on fundamentals and valuation, not accpeting that our government is run by liars and cowards who will print endlessly and manipulate markets shamelessly to prop up asset values.  I'm moving to puts only and holding a few small longs, so I can presereve what's left.  I'm usually right, but always early.  I've made nothing.  Down 45-50% still.  Learning to hate the game. 

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#4) On November 11, 2009 at 6:17 PM, dexion10 (27.05) wrote:

I hear you nuf2bdangerous.


RE: my port and shorts

I am short X via near term puts ... and will exit that trade by monday if not sooner.. I'm just taking a strategic shot here.

I'd prefer to be long JACK - but I used it as a source of funds -I still like that story very much and I'll be back in it before earnings on 11/19.



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