I'm waiting for it to go higher before I short but we are so close. 2.18 higher and we are at a VIX of 20. That's when I start taking the market very seriously. However I'm tempted to take a small position sooner but I will try and contain my enthusiasm.
Longs need to start thinking about their exist strategy. Because when the shorts start entering you should be exiting because we both should not be holding a position at the same time for very long or one of us is very wrong. And history has shown that it's usually not the shorts that mess this trade up.
yes, but none of this stuff happens in a timely enough manner to make money long on TVIX if you buy at the time you first speculate on it. That's why it is better to use the information to get ready to take a short position after the event occurs. In other words to predict that an up swing in the VIX is real and not noise so you can wait for the VIX to go higher and short with more certainty rather than shorting too soon and making less. Because this you can do in a matter of days and not months. Therefore you are only owning the position during the event when money can be made, now while contango decay is eating away at all your potential future profits.
I see this decline in the market over the last few weeks as a possible indication that investors are starting to set their bong down and sober up. Granted we have trigger like China to get it started but I think investors have been having their doubts.
I never said it that we weren't in the beginning of a correction. But we don't know if it is going to be a major correction that is large enough to cause the VIX to exceed 20, not yet anyway. But I'm leaning to it being a major correction so I will definitely wait for the VIX to get into the 20s before I start entering my short position. Because if it gets to 30 I definitely want to have shorted most of my position there. However if it peters out here then I will probably take no position and wait for the next event.
We are getting close enough to Sept. and possible rate hikes that this will cause any of these unrelated corrections to have additional negative weight placed on them. So I'm speculating that until the rate hikes are announced that any corrections that occur before then will be deeper than otherwise. Because this looming storm has many on edge and ready to sell. They are already aware that they should have sold already and regretting that they has not so certainly they are not buyers. Only green investors are buying now. These would be the bargain hunter "want to be" investors who see bargains lurking in the shadows and acts on their imagination.
In the last six weeks and talking heads are saying this is similar behavior as observed in previous 3 corrections. I sense a short opportunity coming upon us. And if nothing happens then I won't short. Just be on the look out because conditions are looking good.
Who would be foolish enough to short TVIX when entering a recession? If you don't understand how to predict a recession you should not be investing at all in stocks. Its pretty easy to do.
Your strategy is much harder than shorting. With shorting you don't have to watch the stock drop week after week as you wait for the next VIX spike. You short at the peak and then conveniently cover a week or two later with no need to be in a hurry to do so. You can make money on the leading edge by buying long or make money on the trailing edge by shorting. But to short you don't need a crystal ball because you short when the peak has already occurred. But if you buy before a peak and the next peak does not occur for 3 months you can't even make your money back. So why take that risk. Why not just play it safe and short instead after you have already seen the VIX exceed 20. You know it's going to go back down because it always does. And the contango decay of this stock in moving in the right direction for the short. In other words you are rowing down stream. The long on the other hand is rowing up stream. Why would you want to do that?
One month in the future is an eternity as far as this stock is concerned. It can lose half its value in a month.
Old highs in TVIX are never seen again. New peaks never exceed old peaks. They are always lower. Just look at a 2 year chart. The decay of this stock is so fast that old peaks are never seen again, ever.
If that is the case then I recommend that you car, house, all your other belongings and invest the proceeds into TVIX. Tell us how that works out for you.
Did you ever consider that someone might believe you and actually buy this #$%$? So it won't be just you losing your stake. It will be everyone you have influenced.
The only time I have ever concerned my self about the interest rate charged is when I short both a long and a short triple leveraged ETF so I can profit from the average decay of each yet maintain a market neutral stance. Basically the value of both combined remains constant in the short term as long as you keep rebalancing to keep the amount invested in each almost equal. But the average of the two over the long term decays and that's your profit. You need to do this with ETFs that have lower interest rates than the average rate of decay. I know someone who has retired using this strategy as it gives him a pretty constant income flow. However it is a long term strategy and thus the interest rates matter. This is how I knew this stock would be so good to short when I was first introduced to it because I have been working with investment techniques to exploit ETF decay for some time. Any of the leveraged ETFs have decay. So look to X2 and X3 ETFs. Some decay worse than others. And the rate of decay seems to increase if volatility is high. I think this has to do with the rebalancing the leverage ratio of the ETFs which causes them to buy high and sell low. So X3 ETFs decay faster than X2 ETFs. And ETFs have expenses. When you are shorting the expenses are a profit to you. Only the long pays expenses.
I'm with fidelity. Before I used to have to call in because my account was not authorized for Fidelity to automatically borrow hard to borrow shares at a higher interest rate. So I filled out and signed some paper work and now when I trade hard to borrow shares show up in my shares available to short window and I can short effortlessly.
There are a few reasons I can think of why the Fed needs to raise rates regardless of their own personal political concerns to save their own #$%$. One is because cheap money causes money to get borrowed and spent less efficiently as the penalty of paying low interest isn't that great. This can create a lot of unnecessary debt and misallocated money and resources. Second is that seniors, pensions funds, and insurance companies have no profitable safe way to get returns to pay for pensions payments and annuities. As a result if you buy an annuity today the payout is #$%$. Other things like long term health insurance companies won't be able to meet their obligations because they had assumed higher returns than they are getting. A lot of things rely on higher interest rates and if rates don't go up it could become a problem. Another bubble of sorts. Pensions funds won't be able to pay out their pensions. I cannot believe that the Fed. is blind to these issues. They know that interest rates have to go up if those segments that rely on higher rates are not to implode creating another crisis of a different sort but a crisis none the less.
Our currency, the USD, is floating. China actually buys dollars and puts them in their banks to keep the value of the Yuan low so that they have a competitive advantage.
It is impossible to have a trade imbalance if your currency is truly floating. Because currency traders will adjust the currency values to make sure all excess currencies are sent to their respective countries. So as a result those countries that export more and import less will have their currencies rise in value until the trade imbalance is zero. So the fact that there is a trade imbalance means their currency is being manipulated by them. You manipulate our USD currency by not sending all the dollars back that you received in trade.
We don't import more than we export. So if we are manipulating our currency there is no evidence of it. Our imbalance is in the wrong direction to imply manipulation by us.
If we were to put the Yuan in our banks to cancel out what China does with our dollar I would not call that currency manipulation. I would call the mitigation of their currency manipulation. However since we still have a trade imbalance obviously we aren't even doing that.
The US is the dummy here. We are the ones getting ripped off and allowing it to happen. Us and the poor people in China who are forced to work for slave wages so the government can grow their economy at abnormally high rates. I'm sure if you put it to a vote in China that the Chinese would want their currency to rise in value so they can afford some of the things that we can afford. But the people in the Chinese government are wealthy and would rather to see China out pace the US economically because that gives them more world power and influence. The Chinese people suffer for their ambitions. As we do because of middle class job losses.
Does anyone seriously consider what the market does for a day or two? The DOW is down 1000 points from its high. Obviously the there are more sellers than buyers over the last month or the opposite would be happening. I would say that most longs are pretty disappointed in this years gains. And because of that many must be wondering why they are even taking the risk of being in and have set stop losses that will be easy to trigger. It doesn't take that many sellers to cause a correction. Most people just sit an hold. Its the actions of a very small percentage of investors that actually moves the market. Those nervous investors can have a lot more influence than their numbers imply. But that's also why these corrections are short lived. Because it doesn't take that many bargain hunters to bring it back up again. The fact is there isn't a lot of support for having a long position in the market today. Certainly not from a valuation point of view. That's why I'm in cash mostly. And shorting the volatility ETFs on market dips. Because nothing else looks attractive.
I'm not saying this as a long TVIX buy signal since it's rarely safe to buy TVIX long. I'm saying to get ready to short TVIX after the market corrects. Commodities are already down and China is acting like a trigger. Some argue that the correction has already started. Anyone invested in the DOW might agree with that. For now just watch and be prepared. If I'm wrong then no harm done. Can't hurt to watch.
Don't waste your breath. They never take profits. They just lose all that they made and use words like scam.