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ProShares UltraShort S&P500 Message Board

  • bergholt Mar 3, 2011 6:37 PM Flag

    please explain to my wife

    OK, trying not to be sexist here, but my wife really does not know why I "take stuff off the table." Much less buy inverse ETFs. Mind you, I love her dearly, but wives tend to be clueless.

    I suppose I am now going to get bombarded by women.

    Oh well.

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    • Maybe you should try to swap her for jl.

    • I like Will Rogers' old saying about how we should worry about 'return of capital' instead of 'return on capital'.

      A lot of little guys lost 30% or more when the last bubble broke, and a number of those are just getting back to even because they missed the big run up. Guess what - does any of this raging gold, oil, food and stock price run-up resemble anything you have seen in the last 3 years? It's another bubble and it will pop again.

      There is room in any portfolio for some hedging in case of a sudden market reversal. The pros do it by options, futures, and other tricks, but there is no great harm in having a short ETF at a time when the market seems way overbought.

      The key is balance, you don't want to be 100% on the side of any trade, and that is a good reason to take profits off the table.

      I have held a short dollar position for quite awhile, and it is doing well right now. But I added a short Euro position today because of the big runup. Am I hedging my short dollar position - well yes - if the Euro drops I will still hold my short dollar position and will take profits on my short Euro position. If the Euro keeps running up, I'll cash in my short dollar position and enlarge my short Euro position. You can do the same thing with stocks, as long as you are not 100% in on the wrong side of a trade.

    • Your wife has been correct, you had no reason to purchase an inverse ETF during the past 6 months. Smart lady, better keep her.

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