When ETFs Go Bad

yabba daba do

Interesting comments and the party is not over. Regarding ETF vs stock picking; none of the above. The key to success is asset allocation, as mentioned diversification into different classes of assets through ETF's or even no load, low fees mutual funds. I read that 90 or 95% of analysts predictions are wrong, forget about a Motley Fool approach to investing. How to approach asset allocation between volatility and potential profitability? Basically it is your time horizon that should lead your toughts; when do you need the money. Second, it should be your risk appetite but don't forget volatility is almost guaranteed and profitability is not. As for myself I always day or swing trade with some small part of my money. I admit I lost some money but it is the only way I found to stay alert and nervous and that allowed me to change my asset allocation accordingly.

Get a haircut Kedroski !

What elitist claptrap "more leverage than people should be trusted with" like the really smart guys were such professionals. Paul save your paternalism for Pelosi et al im sure we will get a huge dose of mommee and daddee in DC trelling us whats best for us

These two always flirt with each other. You can cut the sexual attraction with a knife.

tim67789-

My wife and I said eight years ago with the election of President Bush that our economy would be worse off than the depression in the 30s and now the President-elect Obama things are not going to get any better but worse it was bad enough with President Bush but after Obama gets through with us you wont have enough money to by a loaf of bread.

Shame on all of you!!! That a Negro from the minorities had to be elected to become President and show all of you White people ( I meant the 60%) who are blind and didi not vote for him. HOW TO RUN A REAL COUNTRY WITHOUT RUIN THE ECONOMY LIKE THE BUSH REPUBLICAN FAMILY . DID

No way we can get better at thos point,and now that hes president,the fruth will comeout,we lose again,the people.He cant make it better,even if was possible,rich get richer,and thats how it is.

"people have been sold the idea that they can "invest" in the stock market with their 401ks for their retirement. When the market acts like a casino, instead of an investment market, then those 401k investors are being sold a lie. They are wasting their time investing, because they have almost no chance of winning in the casino market, anymore than they do in a real casino." I totally agree with you 04:58PM EST. I'm starting to rethink all the investment basics that's been inculcated into my head through out the years. Don't know what to think anymore. The financial industry did it to themselves. A whole generation of investors will be lost. You can't trust the analysts, you can't trust the rating agencies. Moody shmoody. The whole industry is a scam. With a little prudence and common sense, my own portfolio fared way better than my mutual funds. Where are the professionals? Are there anybody truly working for the little guys? If not, stop selling your lies.

"people have been sold the idea that they can "invest" in the stock market with their 401ks for their retirement. When the market acts like a casino, instead of an investment market, then those 401k investors are being sold a lie. They are wasting their time investing, because they have almost no chance of winning in the casino market, anymore than they do in a real casino." I totally agree with you 04:58PM EST. I'm starting to rethink all the investment basics that's been inculcated into my head through out the years. Don't know what to think anymore. The financial industry did it to themselves. A whole generation of investors will be lost. You can't trust the analysts, you can't trust the rating agencies. Moody shmoody. The whole industry is a scam. With a little prudence and common sense, my own portfolio fared way better than my mutual funds. Where are the professionals? Are there anybody truly working for the little guys? If not, stop selling your lies.

The market is what it is. If you can analyze things, see trends, understand the charts and be patient for your theory to develop, you can make money. My 401k in May 2008, was down 20% in the mutual funds and I decided to take over the investments. I lost 10% more in the beginning because I was impatient, didn't understand timing and the basic rules of the road in trading like "buy the rumor, sell JUST BEFORE the news comes out, after it comes out is TOOOO late IMO. Now, using a mix of stocks and ETF's I am up 120% from MAY. If I kept doing the FEAR selling I did in the beginning I would have lost more. Now I buy more on the big moves in the wrong direction and wait for my theory to work, and with the dollar cost averaging It has been working. I also play stocks and ETF's that move in the opposite directions but I buy them at different times to lock in the profits or prevent further loss and then sell one or the other on the gigantic moves we have had and them at different times as things stabilize. QID, QLT and Airlines, DUG or DTO DIG, etc. Have really made me a bundle. The key has been cost averaging and waiting for the big moves to change positions.

Correction: QLD

Who decides if I can be trusted with my money you idiot! Ever hear of options. That is much more leverage as they can go to zero. Selling short you can lose more than your investment. Go away you fool. With this vix I am making huge money at 2x and would love 3x or 10x.

Gensek Obamov!! Soviet Union of United Stated, SUUS. Congratulations!!!! A fine president only countries like Kenya and SUUS can deserve!! Lets see you all in 4 years!! I suggest we bring in the Ameros right away.....one world, one government, Obamich!!

i will like to know more about the new elected person in america now see you soon

i will like to know more about the new elected person in america now see you soon

I agree, the decline of the economy under Bush was entirely predictable, Bush is a simpleton and the people who voted for him are not much better. Obama may be blamed for what is coming, but nothing he has said or done so far makes me think that he cannot save your fat asses from the fire. The fact that things are much worse than most people understand is evident from actions like these where slick salesmen are trying a new form of snake oil. Leverage needs to be eliminated entirely from the stock market! If you can't afford to pay for what you are buying in the market, you shouldn't be allowed to buy anything. People will always gamble, even without any money, if we let them. Since we can't break their legs to recover their bets (boy would I like to break the legs of certain bankers), it makes no sense to let them bet with real investors money. This is not like buying a house with a mortgage. If the price of the house goes down then your loss is limited to the decline in value in the house. If you required a 20% down payment, then there is no loss until the value of the house declines by 20%. Not so in stock leverages, especially where the gambler is putting down 10% or less and then uses the asset he acquires to borrow more money to buy more securities at a 10 to 1 leverage. This is what caused the crash of 1929. It is what caused the crash of 2008. It needs to stop. The stock market has a real purpose. The purpose is to allow investment in business concerns, and thereby profit as those businesses profit and grow, providing business with the capital to expand. It loses all value if it is nothing but a casino that will take any gamblers mark. First the funds are not really there to allow the business to expand; it is just a matter of borrowing money at a ridiculously high interest rate. Second, and this is really important, people have been sold the idea that they can "invest" in the stock market with their 401ks for their retirement. When the market acts like a casino, instead of an investment market, then those 401k investors are being sold a lie. They are wasting their time investing, because they have almost no chance of winning in the casino market, anymore than they do in a real casino.

How can this guy be giving good advice, if he can't even afford a hair cut.

This guy is full of BS. Retail investors would like more, not fewer options! I have invested quite a bit in 2x leveraged ETFs (as well as options based on those ETFs) in the past year, and I've found it a great way to scale your investment essentially without touching your cash position. Sure, you can get volatility (I've lost or gained 40+% in one day on some options on leveraged ETFs like SKF or FXP), but if you are using cash in the first place, you can hold onto your positions without risk of margin call as the leverage is embedded. There do exist strategies (if you discipline your emotions) to make excellent returns in these markets, which have enabled me to have 102% returns so far since February. I for one would welcome 3x ETFs as long as they stay approximately true to the 3x the value of the underlying securities. Somebody tell Kedrosky to post actual statistics about these ETFs and their harm to the markets before listening to him. When we've ridden the worst drop in the markets in a long time, it is a great thing to have short ETFs at our disposal considering 401ks are generally long-only. How else can you have a life-hedge during recessionary times?