With the S&P 500 up over 40% from its March 6 low, I thought it would be a good idea to take a quick look at 3x Leveraged Bullish Fund BGU and 3x Leveraged Fund BGZ for a chart and percentage comparison. Let’s see them in action!
3x Leveraged Bullish Fund BGU
What’s surprised me the most is how closely BGU has tracked with the Dow and S&P 500 and doesn’t seem to be as affected by the “percentage decay” that other leveraged funds have suffered (see BGZ below). It looks almost identical to the underlying index, despite being 3x leveraged. That’s rare in the leveraged fund world.
The one thing to watch is the glaring volume non-confirmation (or declining trend in volume) – volume spiked off the March 2009 lows at over 35 Million shares and now averages slightly above 10 Million – a significant drop-off.
Let’s compare the ‘chart perfection’ (in terms of tracking the underlying index) and now look at the Bearish Fund.
3x Leveraged Fund BGZ
This pattern is what we would expect with a 3x (or even 2x) leveraged fund – quick swing ups (quick percentage gains) as the underlying index moves in a favorable direction but then a collapse as the index moves (in this c case) higher.
The risk in these funds is holding for a long time and trying to get back to break-even, which will never happen.
Notice that the S&P 500 made a swing low in December 2008 near 750 as the 3x Leveraged Bear Fund peaked at $130. However, when the S&P 500 made the March 2009 low of 666, the BGZ traded at a lower high of $118. The expectation was for the leveraged fund to make a much higher high but it was not the case – herein lies a major flaw of leveraged funds.
Leveraged funds suffer from percentage decay… the best example being that if you lost 50% of your capital, you could not muster a 50% gain to get back to where you started – you would need a 100% gain on your remaining capital.…
In our time to be truthful is to be provocative. To write provocatively leaves little room for error or mistatement as today’s euphemism terms it. I could shill for the establishment and be wrong 98% of the time and nothing ever would be said about it. But there is no forgiveness for a provocative truth-teller.
You have open inquiring minds and you want to know. Your motives are not to protect your illusions and de...
Randi Weingarten is the president of the American Federation of Teachers, and is a name that hedge fund managers and those on Wall Street are beginning to learn quite well.
About a decade ago, some liberals joined conservatives in pushing to expand charter schools. As the WSJ reports, those efforts received financial support from hedge fund managers including Dan Loeb, Paul Singer and Paul Tudor Jones, who together kicked in millions of do...
Here is an advance preview of the monthly moving averages we track after the close of the last business day of the month. At this point, before the close on the last day of the month, all three S&P 500 strategies are signaling "invested" — unchanged from last month's triple "invested" signal. Four of five Ivy Portfolio ETFs — Vanguard Total Stock Market ETF (VTI), iShares' Barclays 7-10 Year Treasury (IEF), PowerShares DB (DBC) and Vanguard REIT Index ETF (VNQ), — are signaling "invested", changed from last month's all invested signal.
By Jacob Wolinsky. Originally published at ValueWalk.
Shares of TESARO Inc (NASDAQ:TSRO) are super hot today today on Ovarian Cancer results and the rally could continue to be hot until phase 3 results in the fall. The stock is up at the time of this written by over $40, 110%, destroying the shorts (at least for today). The sell side are panicing to play catch up with price targets here is what they are saying.
This morning TESARO Inc (NASDAQ:TSRO reported long-waited Ph3 NOVA data, showing s.s. PFS benefits in both cohorts; plans to file for U.S. & EU approval in 4Q16. Contrary to our cautious stance on non-gBRCAm/HRD+ arm following experts’ discussions, this arm also showed s.s clinically meaningful PFS benefits of ~9mo. AE profile was consistent with Ph1 data (most common Gr3/4 AEs thrombocytopenia, anemia & neutropenia). Full data to b...
The media seems to be focused on the Brexit issue, with most of the coverage suggesting it was a negative event. Regardless of the media’s focus, prices are attempting to do something in Europe, that could be bullish and surprise a few investors.
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The FTSE 100 Index remains in a long-term bullish trend (lower highs and higher highs) over the past 5-years. The bottom of the rising channel (A) was hit in Fe...
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I have mixed feelings about Brexit today. Clearly the European institution need reforming. The addition of so many countries in the last 20 years has created a top heavy administration. The Euro adds more complexities to the equation as the ECB policies cannot fit every country's problem. On the other hand, a unified Europe has advantages as well – some countries have benefited from the integration.
For Britain, it's hard to say what the final price will be. My guess is that Scotland might now vote for independence as they supported staying in Europe overwhelmingly. Northern Ireland might be tempted to leave as well so possibly RIP UK in the long run. I was talking to some French people and they were saying that now there might be no incentive for France to stop immigrants from crossing over to the UK like they do now and simply allow for travel there and let the UK deal with them. The end game is not clear to anyone at the moment....
One week ago, when bitcoin first crossed above $700 on the seemingly insatiable Chinese buying which we forecast last September (when bitcoin was trading at $230) would take place as a result of China's capital controls (to much pushback by the "mainstream" financial media), we tried to predict what may happen next. We said that "it could go much higher. That said, anyone who bought last September when the digital currency was trading at $230 may be advised to take some profits, and at least make...
After a three-year bull run that more than quadrupled its value by its peak last July, IBD’s Medical-Biomed/Biotech Industry Group plunged 50% by early February, hurt by backlashes against high drug prices and mergers that seek to lower corporate taxes.
This is a non-trading topic, but I wanted to post it during trading hours so as many eyes can see it as possible. Feel free to contact me directly at firstname.lastname@example.org with any questions.
Last fall there was some discussion on the PSW board regarding setting up a YouCaring donation page for a PSW member, Shadowfax. Since then, we have been looking into ways to help get him additional medical services and to pay down his medical debts. After following those leads, we are ready to move ahead with the YouCaring site. (Link is posted below.) Any help you can give will be greatly appreciated; not only to help aid in his medical bill debt, but to also show what a great community this group is.
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