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ProShares UltraPro Short S&P500 Message Board

  • fruit_of_the_womb fruit_of_the_womb Jan 31, 2013 7:00 PM Flag

    SPXU has been going down since it's very inception 4 years do you people survive???

    That's crazy. I just looked at a big chart of it and it's never gone up in any sustained manner and combined with the effects of contango it's just been death by a thousand cuts. Unless something really goes terribly wrong in the world, this thing is only going to keep going down!

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    • Contango?

      That is an issue for the long VIX ETPs that are based on an index that requires the theoretical (or actual) daily rolling of a portion of the futures contracts on which the index is based.

      That does not apply here. This is an inverse stock ETF. And at any rate, the S&P 500 futures contracts are in backwardation, not contango, at least as those terms are defined for commodity futures. I'm not sure that concept really applies to stock futures.

      SPXU is not a buy-and-hold investment. It is a trading or hedging vehicle. It will lose value in the long run because the market will go up in the long run. Sustained rises will be unusual because even in bear markets there are ferocious counter-rallies. It will also lose value due to a characteristic that many have called "volatility decay." Research it. All inverse ETFs have it. All leveraged ETFs have it whether or not they are inverse. It's impact is greatest on ETFs that are both leveraged and inverse, as this one is.

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