The Evil Twins of Bank Stocks

• Report this Comment On May 11, 2009, at 4:22 PM, Seano67 wrote:

  These things are dangerous, very, very high risk. I bought into FAZ last week in anticipation of the 'stress tests' (HA!) being released, and it's been a nailbiter ever since, and I am still way, way down.

  This was my first time with these leveraged ETF's, and I would advise anyone and everyone to be wicked careful with these things. They're not for everyone, and I almost wish I hadn't bought in.

• Report this Comment On May 11, 2009, at 5:43 PM, mjonesy1985 wrote:

  I bought GNW before earnings and made a nice gain. I will sell tomorrow though as it seems a little out of steam for the time being. Ill get back in later.

• Report this Comment On May 11, 2009, at 8:06 PM, tj80716 wrote:

  FAS & FAZ have only been around since November 5, and should not be used for long term investments. The volatility is one thing, but compounding of the leveraging effect will eventually kill you. Their initial prices were $55.50 & $60.22, and today's closes were $10.52 & $5.13 ( -81.0% & -91.5%) respectively.

  The $RIFIN.X which is the index these ETF's are supposed to track is only down 21.0% over the same period. So you might expect the 3X bull FAS to be down 63%, but the -3X bearish FAZ could be expected to be up 63% (not down 91.5%).

  Compounding is only a wonderful thing, when it is working for you. Enjoy the frequent 10-25% intraday swings, but you are braver than I, if you think you can call which direction the just as frequent 5-15% morning gaps are headed.

• Report this Comment On May 12, 2009, at 12:41 AM, Seano67 wrote:

  "I bought some this morning at $4.75 based on a recommendation by Hot Stocks and it's paying off nicely so far. So far all their recommendations have been profitable for me. they are at:"

  Suzi99, I don't know that I would necessarily endorse any service that recommends FAZ as an investment without explaining how dangerous it can be. To me that's somewhat irresponsible, but whatever. Hopefully people will do as they should and take that advice with a grain of salt and look into it before deciding to sink any money in. I could see if someone were able to be at a computer all day refreshing the ticker every 5 seconds, but I'm teaching school for 8 hours a day, and so there's very little I can do so far as that goes.

  "The $RIFIN.X which is the index these ETF's are supposed to track is only down 21.0% over the same period. So you might expect the 3X bull FAS to be down 63%, but the -3X bearish FAZ could be expected to be up 63% (not down 91.5%)."

  tj80716, yeah, how the hell does that work? FAZ seems to go down much more quickly than it goes up, at least from my limited observation of it. Why is that, and how does it work? It almost seems like it would require an economic and financial collapse of almost biblical proportions to make this thing really move upward, or maybe that's just me. I don't know.

  What I do know is that having this thing stresses me right out. Honestly, it about feels like holding a ticking time-bomb, and I'm having this constant internal debate as to whether I should just cut my losses and get the hell out immediately, or hold and see what happens (and very, very possibly if not likely lose a whole lot of money in the process). It's a difficult call, and I really don't like it. This was not and is not investing, it was and is pure speculation. Not really my cup of tea, and I wish I hadn't bought in. I've definitely got a case of buyers remorse going on here.

• Report this Comment On May 12, 2009, at 6:18 AM, automaticaev wrote:

  sell

• Report this Comment On May 12, 2009, at 6:26 AM, automaticaev wrote:

  sell it today.

• Report this Comment On May 18, 2009, at 1:20 PM, snic2u wrote:

  I bought into UYG when the stocks was down a few months ago. I am now up153% with the sky being the limit. I was up over 200% at one time but with the ability to sell calls on the investment, the potential dividend pass throughs and the highs that the investment has had in its 52 week history at the time I bought it, it is both a good income producer and long term investment with limited downside (from where I purchased it) and a tremendous upside. As with ANY market investment never invest more than you are willing to lose as losing is a potential option with this and any market.

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