UltraShort Basic Materials ProShares (SMN)
Exchange traded fund
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ProShares UltraShort Basic Materials seeks daily investment results, before fees and expenses, that correspond to twice (200%) the inverse (opposite) oif the daily performance of the Dow Jones U.S. Basic Materials Index
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shorting all ultrashorts, bears, and other "leveraged" funds.
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tmfeldrehed
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Ultra-shorts and Ultra-pros are all bad investments due to daily rebalancing
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Gold, silver and copper are set for a huge run. Especially copper.
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Ultra funds suck in the long term to begin with. Couple that with general outperform on hard assets over the next couple of years....
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leverage eats away returns
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Testing a theory here with this account, shorting all short ProShares for starters.
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commodites boom comes after the bust. duh.
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Very unclear on what they actually do, they invest 80% of their assets... what are they producing? Sounds more like a company paying a few people to re invest assets, rahter than harvest materials.
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Because Ultras Suck
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After 50% plus declines in most markets, could there be a worse time to go double short on any index.
One year price objective: $15
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stats geek
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Can't build things with paper though.
MAterials are being slaughtered. Way down. Probably it will continue, and I will loose dozen of Caps points.
But at the end of day, somebody will find out, that producers have stop production, that their balances are full of cash, that downturn has been already priced in their share prices etc.
It is going to cost me a lot of points, but at the end of game ...
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1 out of 5
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Basic Materials Ultrashort.
So I picked red thumb on this a while back simply because it was an ultra short fund. I've come back to it wondering about my move from here. I was going to close this because we the prices of basic materials are getting fairly pricey. I did some math on the back of a receipt and here is the theory I came up with.
With a LONG RUN red thumb you are getting:
- 0% + Inflation + plus small crowded world effect. Lets call it +3.5%. This is an inverse fund, so +7%.
- Red thumb gives me that .95% expense ratio.
- The long run market returns for the S&P will be around 8% (the days of 10% are gone). So with a red thumb that is added to my score.
7% + .95% + 8% = +15.95%. Now compare that with the risk of a bubble bursting. IE if the bubble bursts today and hammers me for -32%, it'll take 2 years to break even. I doubt the burst will be that significant, The red thumb seems sound.
Very very quick calcs, I could be stupid.

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