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MEMC Electronic Materials Inc. Message Board

  • horacebello horacebello May 8, 2009 4:29 PM Flag

    they must understand those who buy FAS FAZ

    Consider the evolution of FAZ, [the leveraged ETF Inverse x 3 on the index $ RIFIN (Financials Russel 1000)], but to compare with any license through, we can see an ETF like the XLF real (Direct S & P Financials).

    An attempt to demonstrate the fallacy of the largest world market these days.

    FAZ has fallen 92% from its peak of $ 115 from March 6. _
    We also see how the volume was rising as the price fell, an effect that evidence that the market interpreted more roles that were bought for the same money, or simply drop the price did more accessible to investors.
    The pattern of per FAZ suggested that these prices are about $ 8 an excellent entry point for that bet on a reversal bears the cost of this kind to $ 115 in the short time it took to fall. .....
    If you think this is completely wrong.
    Look evolved as XLF for the same period:
    In the same period fell by 92% FAZ, XLF was up 92% from its minimum to $ 5.88 from March 6 until its peak of $ 11.33 from April 17.
    If FAZ is a leveraged ETF Inverse x 3 ..... how can this be?
    The adjustment mechanism of these ETF's are explained in the entry Distortion leveraged ETF's.
    Now, concentrate on the psychology of the average investor and try to reason as such. _ "FAZ was XLF to $ 115 when it was $ 6, so buy now to $ 8 FAZ that XLF tested its minimum $ 6 in March, again FAZ worth $ 115!
    Nothing but false and misleading. _
    These ETF's are not moving linearly, but let's assume for a moment that if they do so to simplify the example below and make certain licenses and work with round numbers.

    To go back to $ 6 XLF should fall by 50%. This would mean a 150% increase of FAZ. : 150%! Perfect! Just a 150% on a species that is listed for $ 8 takes it to $ 20. FAZ And to my $ 110? _
    Already participating arrives!
    With the same license linearity applied before, bought their $ 8 FAZ need a modest increase of 1375% to reach $ 115.
    Nor is it so much! XLF should just drop a 450 %.....
    Anything can: XLF may fall 10% one day, 20% the next day and continue falling until sometime in their lives their expected FAZ worth $ 110 .
    Just be clear that the rates of which we speak and the fallacy of the belief that a fall of 50% is recovered with an increase of 50%.

    As we apply the same logic marking on DXO, an ETF Double Live Oil. DXO quoted at approx. $ 28 when oil was $ 140 its maximum around mid-2008. DXO now listed at about $ 2, so to get back to those $ 28 (by linearity) requires an increase of 1400%.
    This would imply an increase of no more and no less than 700% in the price of Oil.
    Oil should contribute to $ 350 per barrel for DXO worth $ 28 again.
    Sitting their FAZ Wait for $ 115 and $ 28 to DXO. .... and take all that time to think again and not fall victim to this trap of investors.

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    • Should correct the percentages of the FAZ drop at the closing price today.
      In reality has fallen 96% from its maximum and it is clear that I was writing the report without giving much attention to the accuracy of genetic percentages of the day.

      CICERO in Catilina wrote : "that is the point of laws if they fail the principles?
      (for the analysis of FAS FAZ offered, I have no doubt of its principles)

      dedicated to mysman 1 and his Queen of Sweden

      • 1 Reply to horacebello
      • There have been 21 52-week (intraday) lows in FAZ since December. (See my post on the FAZ board). The fund is not even 52-weeks old! The only way to trade it now is as a daytrader. That is a full time occupation. Until anyone can call a bottom that holds for a month, most investors should stay away, as this is definitely not child's play. All of the derivative traffic in FAS/FAZ is feeding back on itself, causing greater price movement. Last year, on the FXP board, one poster made the correct call on FXP, and we profited strongly from that. But FXP and FAZ are based on different support mechanisms. If there is a FAZ guru out there, may he please step forward. All the money is being made in FAS. The traders know that, and once they sucker the easy money out of that position, it will be FAZ's turn. Stay tuned.

    • anyway,'m not so concerned with the climb of the DJIA that many see in 8900 before the reversal.
      FAZ should have a back -insured ?? - up to 10 dollars, as the parable of the DJIA.
      be true?
      (I have read that BAC has a very bad position in options ARMS with sidereal losses.
      Of course, some day, somebody 'll connect the adjustable mortgages at Wachovia and WFC may return to the next reality show).

    • Hola, DXO is not linked to the price of oil, but rather, the oil futures.

      • 1 Reply to mysman1
      • sorry for my mistake mysman 1
        when I have to write in english and the numbers in my brain, always forget something.
        Remember that.

        anyway, the mail attempt to explain those who read this, the fallacy of these instruments;
        as well clarifies TRAD the money from gamblers always disappear without trace at the pocket banks.