It just seems pointless to chart anymore, as the machines are in control, not humans. Humans do their buying and selling on emotions, so they can be somewhat predictable… but not machines.
I believe that's why all the turn dates based on the moon phases or astrology, don't work anymore. Frustrating isn't really a strong enough word to express how I really feel about this market.
Yeah the volume last week was shocking! (not really) But I agree with you, there is really nothing happening and the market lost all of its fun factor.
My account is hurting after anticipating a correction but hey… Welcome to the machine.
I will concede that buying and hold at 3x ETF can get painful when the market goes against it. I like Americanbulls in that regard, as it will eventually generate a SELL signal for a 3x ETF when things go badly.
Regarding: If you buy and hold 3x etfs, then over time, as in eventually, not just during 1 specific holding period, you will end up losing everything. Because if you buy and hold, eventually, over time, the market will experience a 33.33% move against you. Your 3x ETFs will magnified that into a 99% lose. That is a mathematical certainty.
— — — – — —- —
SC,
A 33.3% move in $RUT against the 3x ETF would be painful, but not as painful as you describe.
A 1% loss in $RUT 41 days in a row would result in a 33.71% loss in $RUT, and a 71.3% loss in TZA (not a 99% loss).
It would take 151 days of a 1% $RUT loss every day to lose 99% on TZA. And at that point, $RUT would have lost 78% (not 33.3%).
I got that from a spreadsheet I made up. As a sanity check, I looked at the last year — $RUT was up 72%, and TZA was down 90%.
It all depends on how you want to define “over time”, Earl.
If within your holding period, the market makes a trending move over 33%, then buying and holding a 3x etf and its inverse is a strategy that will always yield a positive returns. Not necessary superior returns, however. Under such conditions, the statement “you cannot hold 3xetfs over time” would be wrong.
If you buy and hold 3x etfs, then over time, as in eventually, not just during 1 specific holding period, you will end up losing everything. Because if you buy and hold, eventually, over time, the market will experience a 33.33% move against you. Your 3x ETFs will magnified that into a 99% lose. That is a mathematical certainty. The geometric mean of any 3x ETF is for all practical purposes, just about ZERO, over time.
Thus technically my statement is valid. It is just not precise.
Lets look at the last year.
I am using data from StockFinder. I created a spreadsheet
As you can see, depending on the invested period, your TZA + TNA may or may not work. The spreadsheet is self explainatory. It shows investing half in TZA and half in TNA, vs the RUT, and shows two different investement periods. One started where first data is available in StockFinder, and the other started at around the March 09 bottom.
The data provides a glimpse into the effect of compounding geometrically and rebalancing daily. If you dig yourself a hole, then it takes a lot to climb out of it. 3XEtfs are powerful hole diggers. LOL
I posted this in response to a post from SC, wanting to say something nice about 3x ETFs after SC blasted them. Then I realized it's pretty much buried in a conversation and no one will see it, so I'm posting it here.
Let's say you had $100,000 a year ago, and divided it into three parts:
$33,333 to stay in cash $33,333 to buy TZA (a 3x inverse ETF) $33,333 to buy TNA (a 3x ETF)
I know you say that you really cannot hold leveraged ETFs over time. But let's say you decide to hold these for a year to see what happens.
Take a look at these results:
After one year, the cash is still worth $33,333 After one year, TZA fell 90% to $3,434 After one year, TNA rose 260% to $120,074
After a year, your original $100,000 is now worth $156,842. That's a 56% increase in one year.
It just seems pointless to chart anymore, as the machines are in control, not humans. Humans do their buying and selling on emotions, so they can be somewhat predictable… but not machines.
I believe that's why all the turn dates based on the moon phases or astrology, don't work anymore. Frustrating isn't really a strong enough word to express how I really feel about this market.
Yeah the volume last week was shocking! (not really) But I agree with you, there is really nothing happening and the market lost all of its fun factor.
My account is hurting after anticipating a correction but hey… Welcome to the machine.
SC,
I will concede that buying and hold at 3x ETF can get painful when the market goes against it. I like Americanbulls in that regard, as it will eventually generate a SELL signal for a 3x ETF when things go badly.
Regarding: If you buy and hold 3x etfs, then over time, as in eventually, not just during 1 specific holding period, you will end up losing everything. Because if you buy and hold, eventually, over time, the market will experience a 33.33% move against you. Your 3x ETFs will magnified that into a 99% lose. That is a mathematical certainty.
— — — – — —- —
SC,
A 33.3% move in $RUT against the 3x ETF would be painful, but not as painful as you describe.
A 1% loss in $RUT 41 days in a row would result in a 33.71% loss in $RUT, and a 71.3% loss in TZA (not a 99% loss).
It would take 151 days of a 1% $RUT loss every day to lose 99% on TZA. And at that point, $RUT would have lost 78% (not 33.3%).
I got that from a spreadsheet I made up. As a sanity check, I looked at the last year — $RUT was up 72%, and TZA was down 90%.
Compounding destroys the 3-1 ratio during trends.
It all depends on how you want to define “over time”, Earl.
If within your holding period, the market makes a trending move over 33%, then buying and holding a 3x etf and its inverse is a strategy that will always yield a positive returns. Not necessary superior returns, however. Under such conditions, the statement “you cannot hold 3xetfs over time” would be wrong.
If you buy and hold 3x etfs, then over time, as in eventually, not just during 1 specific holding period, you will end up losing everything. Because if you buy and hold, eventually, over time, the market will experience a 33.33% move against you. Your 3x ETFs will magnified that into a 99% lose. That is a mathematical certainty. The geometric mean of any 3x ETF is for all practical purposes, just about ZERO, over time.
Thus technically my statement is valid.
It is just not precise.
Lets look at the last year.
I am using data from StockFinder. I created a spreadsheet
http://spreadsheets.google.com/ccc?key=0ApppzmO…
As you can see, depending on the invested period, your TZA + TNA may or may not work. The spreadsheet is self explainatory. It shows investing half in TZA and half in TNA, vs the RUT, and shows two different investement periods. One started where first data is available in StockFinder, and the other started at around the March 09 bottom.
The data provides a glimpse into the effect of compounding geometrically and rebalancing daily. If you dig yourself a hole, then it takes a lot to climb out of it. 3XEtfs are powerful hole diggers. LOL
AAPL is one big ritual
The list price of the Apple I back in july 1976 was $666.66
AAPL released the Power Mac line on 3.14 1994
very very interesting. Thanks Sundancer.
today is 3.14
Don't ever forget the Pi proportion.
Since today is SUNday and the market is closed where & when was the Pi ritual performed?
It was performed on 3.12 & AAPL held the ritual. (Would you like some AAPL Pi?)
The open & high on 3.12 in AAPL was 227
22/7 = Pi
Since the market is closed on 3.14 why was the ritual performed on 3.12 vs 3.15.
3*12 = 36
Sum of 1:36 = 666
The co-relational Pillars of the construct on display friday. It was a very very important day on friday.
I'll talk about the $SPX co-relational value : date this week sometime.
Think I got it. Thanks.
I posted this in response to a post from SC, wanting to say something nice about 3x ETFs after SC blasted them. Then I realized it's pretty much buried in a conversation and no one will see it, so I'm posting it here.
Let's say you had $100,000 a year ago, and divided it into three parts:
$33,333 to stay in cash
$33,333 to buy TZA (a 3x inverse ETF)
$33,333 to buy TNA (a 3x ETF)
I know you say that you really cannot hold leveraged ETFs over time. But let's say you decide to hold these for a year to see what happens.
Take a look at these results:
After one year, the cash is still worth $33,333
After one year, TZA fell 90% to $3,434
After one year, TNA rose 260% to $120,074
After a year, your original $100,000 is now worth $156,842.
That's a 56% increase in one year.
That's really not that bad.