I cannot believe how poorly EWZ has performed and it only seems to get worse. Is there any doubt that EWZ is going to dip below $20 in the near future? It is really hard to believe that EWZ actually closed at $49.80 on 9/10/14, just one year ago. EWZ also closed at $70.91 on 9/10/10, five years ago.
I would like to think that we are at the capitulation stage, but I've thought that many times during the past five years and have been wrong each time...
The VIX is a measure of the implied volatility of S&P 500 index options. It is calculated by the Chicago Board of Trade and is calculated for at least 15 minutes after SVXY has closed trading. Yesterday, the VIX kept rising after SVXY has ceased trading for the day. Although SVXY closed at 57.14 yesterday, the net asset value at the time at which the VIX closed was 52.07. So the net asset value of SVXY was actually about 8.87% below its closing value.
As of right now, the VIX is down 24% and SVXY is down about 0.51%. However, the net asset value of SVXY is actually up about 9.2%. During large moments of the VIX, SVXY tends to move about 40% as much in the opposite direction. So this price of SVXY is about what I would expect it to be today.
If you want to see the net asset value of SVXY, look up the quote on Yahoo Finance for ^SVXY-IV
The VIX at 40.74 means that traders believe that there is a 68% chance of the S&P 500 Index moving (usually dropping) about 11.8% during the next 30 days. The S&P 500 Index (and SVXY) will probably continue dropping unless a central bank steps in and does something big...
The VIX closed at 15.25 on Wed, 8/19, and at 40.74 today. That is a 167% increase in just three dating days. This is by far the largest increase in the VIX over a 3-trading day period. The next largest increase since the creation of the VIX in 1990 was a 105% increase during August 2011.
During this same period SVXY has decreased from a closing value of 91.85 on 8/19 to 57.74 today, a drop of 37.1%. The NAV of SVXY is even lower right now - it is down 9.8% in the after-hours market to 52.10.
This movement should show everyone that SVXY is not a long-term hold. However, I still think that a lot of money can be made off SVXY because the majority of the time SVXY is going to be rising. the key is to periodically sell to lock in gains or add to a position when SVXY has plummeted.
SVXY may go down a bit more from here. However, I have no doubt that when the markets finally calm, which they will, SVXY will start a sharp new uptrend, just like like in did after the carnage in 2011 and in Oct. 2014
Adjusted for reinvestment of distributions, EWZ closed at 69.705 on 4/4/2011. Today it closed at 27.21. That is a drop of nearly 61% over the past 4 years at a time when U.S. stocks have steadily risen higher.
The scary thing is that EWZ seems like it could continue to drop lower and lower. I'd like to say we are close to capitulation, but I've thought that before only to see the bottom drop out yet again.
It astounds me that the total return (including reinvestment of dividends) of RAI is greater than 5,200% since the market close on 12/31/1999! That is an annualized return of nearly 29% since then.
I know that Altria is generally considered the poser-child for tobacco stocks, but Altria's total return (accounting for spin-offs and dividend reinvestment) is nowhere near as high as that of RAI. Earlier in the year I calculated the total return of an investment in Altria on 12/31/1999, assuming reinvestment of dividends in Altria and in the spin-offs, and calculated a total return of about 1,450% through early January 2015. I have not yet updated by calculations, but I think that the total return through 8/5/15 is probably around 1,600% or so.
Does anyone have any theories as to why RAI has outperformed MO by such a large margin since 12/31/1999, and is it likely to continue to do so?
Sentiment: Strong Buy
Correct me if I am wrong, but aren't Altria and Reynolds ideal investments going forward over the next 10-20 or longer? They are in an industry dominated by two major players, controlling something like 85% of the U.S. tobacco market. Their products are addictive so they have loyal customers. Although the number of U.S. smokers has been decreasing for decades, smokers are very loyal. Altria and Reynolds aren't foolish enough to engage in a price war and each has a certain degree of pricing power. There are also huge barriers to entry given the advertising prohibitions.
Obviously there is always the potential for the government to completely ban smoking and there is an ongoing litigation risk. MO and RAI seem like ideal investments for anyone who plans on investing for a long period of time.
Sentiment: Strong Buy
Every time I think the EWZ is about to bottom, more bad news comes out of Brazil, which causes EWZ to re-test its lows or hit new multi-year lows.
Are we going to have to wait until mid-2016 before EWZ finally bottoms? I would think that EWZ is due for a large pop if Brazil ever gets inflation under control and starts growing and attracting new investor money again...
It astounds me that Latin American stocks have performed so poorly since 2010. Every time I think that the Latin American stocks are about to bottom, more bad news comes out of Brazil which causes their markets to hit new multi-year lows....