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ProShares Ultra Real Estate Message Board

  • juststeve55 juststeve55 Apr 24, 2008 10:21 PM Flag

    so we just keep going up

    glad i'm in

    s

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    • Don't sell URE. Seriously. Imagine where URE will be in five or ten years when the real estate market fully recovers. It could easily be a triple from here. This is a good ETF for your retirement account.

      • 1 Reply to Neil_Hollands_Uncle
      • I'm very pro REIT (if you don't believe, just look for my username on the SRS board and see my arguments with the REIT bears.)

        However, I think there would be a problem with URE in a retirment account..

        There seems to be a mathematicl loss of value caused by the 2X on market re-tracements.

        To see this, imagine that IYR goes up by $10 and then goes back down by $10. (A large move, but it will make the result clearer.)

        Movement of IYR up by 10 and then down by 10:

        Day 1: 70
        Day 2: 80 (+14.286% from 70)
        Day 3: 70 (-12.500% from 75)

        Impact on URE:

        Day 1: 38
        Day 2: 48.86 (+28.572% from 38)
        Day 3: 36.64 (-25.000% from 48.86)

        Notice IYR is flat because it goes up by $10 but then back down by $10. But URE lost $1.36 of value. The same thing happens on retracements going the other way too:


        Movement of IYR down by 10 and then back up by 10:

        Day 1: 70
        Day 2: 60 (-14.286% from 70)
        Day 3: 70 (+16.667% from 60)

        URE:

        Day 1: 38
        Day 2: 27.14 (-28.572% from 38)
        Day 3: 36.19 (+33.333% from 27.14)

        Again, here IYR has returned to it's original value, but URE has lost money.

        In amore realistic market move up and down, the loss would be smaller, but over time the losses would add up.

        This seems to point toward using URE as a trading tool by trying to hold it only when the market is going up.

 
URE
92.84-0.64(-0.68%)Jul 21 4:00 PMEDT

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