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If I Knew Then What I Know Now

(6 posts)

  1. Tom
    Member

    We all had to start somewhere with our ETF investing. What have you learned through the months or years since you started investing in ETFs that you wish you had known from the get-go? I'm really interested to hear your responses!

    Posted 1 month ago #

  2. Donato
    Member

    I wish I had fully understood the "time decay quotient" of the leveraged ETF's. For example, to stack the odds in your favor, you have to short them. So that means if you want to go long, you short the ultra shorts; if you want to short the market, you short the ultra longs.

    Posted 4 weeks ago #

  3. roughbert
    Member

    Donato, Yahoo search says:

    We did not find results for: "time decay quotient". Try the suggestions below or type a new query above.

    Please can you explain what you are referring to? A link to an authorative source would be helpful too.

    Thanks!

    Posted 3 weeks ago #

  4. Donato
    Member

    Hi Rough . . .
    The term "time decay quotient" is just the way my brain see's it. It is what happens when, for example, an equity repeatedly moves up then down by 20%; you will never get back to where you started. Take a more extreme example . . . 50%. If an equity loses 50%, then it must increase by 100% to get back where you started. There has been much written about this on this web site and others. There is probably a better term for it, but the reality is that the value decays over time.

    Then there is the fund expenses. So, if you want to stack the odds in your favor, short the fund. Think about it . . . if there is a 1% management expense, and you short it, that one percent goes in your pocket! I realize it's an annual expense, but it is the point of the matter.

    Another way to look at it would be to look at UNG and SKF one year ago and compare it to today. Shorting leveraged funds is the only way to go.

    Somebody, I think Proshares, recently came out with a study that disputes the time decay theory. But the charts show otherwise.

    Posted 3 weeks ago #

  5. Donato
    Member

    CORRECTION FOR ABOVE

    Hey Rough (and others) . . .
    I was just reviewing the above post and caught an error that may be confusing. I did not mean UNG; rather, I meant to compare SKF (the ultra short financial) to the ultra long financial UYG.

    Posted 3 weeks ago #

  6. roughbert
    Member

    Donato, that makes more sense!

    Posted 3 weeks ago #

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