Guys serious queston. A few months ago I bought around 10k of BOIL a 3x levered natural gas ETF. I held it for a month where it went up by 1.4%. however I lost 1,000 dollars due to fees associated with holding the stock that I don't fully understand. Fastforward, I buy 13k worth of SH that i want to hold for a year. I read the paper on it and it said the only cost of holding it is 1% a year which is an acceptable amount. My fear is that somehow I am in the red on SH even though the market has gone down. Are there hidden fees associated with 1x inverse SH that i am not aware of?
Is SH a stock that you are only supposed to hold for a very short period of time or can i hold this for a year without getting murdered in leveraged fees? i thought SH wasn't heavily leveraged
I am not very intelligent so it is hard to read the prospectus because they use advanced language.
I have read this-->
Intraday Ticker SH.IV
Inception Date 6/19/06
Expense Ratio * 0.90%
NAV Calculation Time 4:00 p.m. ET
I understand the expensive ration to be a .009 a year so at 13,000 USD i would be paying around 130 a year in fees?
>wiped out on American Apparel
>even down on your short ETF
>overall 20% loss on your investments
Kek overload. You've made some fucking awful choices. I would seriously recommend that you stop trying to play the markets and just put your money in a nice, safe savings account.
>fees associated with holding the stock that I don't fully understand
Look. This is a huge red flag. It's clear you don't have knowledge that these instruments require.
Stick to the stocks until get it.
Fucking top kek
These are exactly why these complex financial instruments are created in the first place; to fleece rubes like you out of all your money. Hell, you can't even read the prospectus without throwing up your hands and coming to 4chan.
It's like poetry.
I've read it but i don't understand it bc it uses needlessly complex language designed to confused the public
from what understand it charges 1 percent APY
ProShares Short S&P500 (the “Fund”) seeks investment results
for a single day only, not for longer periods. A “single day” is
measured from the time the Fund calculates its net asset value
(“NAV”) to the time of the Fund’s next NAV calculation. The return
of the Fund for periods longer than a single day will be the result
of each day’s returns compounded over the period, which will very
likely differ from the inverse (-1x) of the return of the S&P 500®
(the “Index”) for that period. For periods longer than a single day,
the Fund will lose money when the level of the Index is flat, and
it is possible that the Fund will lose money even if the level of
the Index falls. L
"their use of derivatives can create tracking error even without leverage" can anyone explain how "derivative use" is causing my SH position to bleed just as much as a 3x inverse highly leveraged BOIL ETF?
yeah it's just fucked up. I make the right call. The SP500 drops 9% and i still lose money. I think i'm just going to stick to stocks. These ETFs are fucked and are designed to steal goyums money.
>why does it still bleed money everyday
Because the relationship between the ETF and the underlying are reset every day, making this valuable as a daily hedge, terrible as a long term hold.
I hope you're trolling otherwise good god man..
Close all of your positions now. Even at the losses you have. You have no idea what you're doing.
That's the best advice you're going to get here.
I lost 5k on gold and 7k on zillow.com. The best part is that this is all of my savings and that i havent been able to find work for 4 years.
okay so we have established that SH isn't a good long term hold to short the market. I feel like the market is going to crash in the next 6 months. Is there any position i can hold that won't bleed itself to death everyday that can make me money when the market crashes?
I'm guessing this isn't a margin account?
Most individual stocks will fall to some degree during a bear market, meaning you could short a great many things, but you would need some significant sums (and margin) to capitalize on it. Shorting isn't free, and if you miss your guess on the timing, you can blow through all your available capital before it goes where you want it.
It sounds though, like you want the market to get you out of the hole you dug, and that doesn't work out very often.
>short a great many things, but you would need some significant sums (and margin) to capitalize on it. Shorting isn't free, and if you miss your guess on the timing, you can blow through all your available capital before it goes where you want it.
>It sounds though, like you want the market to get you out of the h
okay. It sounds like i really fucked up buying ETFs. The sp500 is down 9% but i'm still out 300 bucks on my SH position.
USO is down bc oil is down but due to contigo even if oil goes back up to where it was when i bought it 53 bucks a barrel i think i will still be down several thousand.
I'm never buying an ETF again.
Is it possible to buy oil futures with around 15,000 USD? i don't want to buy on margin. I just want to oil some fucking oil without my position bleeding itself to death
>Is it possible to buy oil futures with around 15,000 USD?
You would need approval from a brokerage to trade futures. This will include submitting proof of things such as income, cash reserves, trading experience, etc.
Basically, the brokerage will want to know if they're likely to be on the hook for your ass.
Beyond that, current maintenance requirements for crude contracts are around $4,400. But I would seriously familiarize myself with how futures operate, if you want to avoid getting cornholed again.
>I'm never buying an ETF again.
See, this is the same type of assumption and generalization that got you into this pickle in the first place.
There is nothing inherently wrong with ETFs. Any of them. Broad market index, sector index, short, long, commodity, leveraged...they all have their place and function and generally do it well.
The problem is some investors/traders don't read the prospectus, don't understand the underlying assets, and make assumptions about what purpose the ETF is supposed to serve.
Rather than jumping from "the market is going to go down in the next 6 months so I'll buy and hold a 3x leveraged short ETF" to "I'm never buying an ETF again", why don't you chalk your losses up to a tuition payment on an investing education. Then spend some time learning what these products are for. There's nothing wrong with the products, but they're not for everyone and you need to understand them before buying.
Also, if you can't understand the product or its prospectus, that's a pretty good sign that it is not a good product for you to invest in.
the reality is that I only learned about the ETF USO on a website that was probably paid for by proshares, the company that manages the etf. USO was marketed to my as a solid, long term long investment for spot crude oil. What it really is, is a position that very loosely follows oil and should not be held for more than a few days and bleeds money out the ass reguardless if oil goes up or down because while it is not leveraged it is a derivative.
ETFs are marketed in such a way that they are a scam.
>USO was marketed to my as a solid, long term long investment for spot crude oil
Are you sure?
This is from USO's website:
"Commodity trading is highly speculative. Commodities and futures generally are volatile and are not suitable for all investors. USO is speculative and involves a high degree of risk. Investing in USO subjects you to the risks of the oil industry. These risks could result in large fluctuations in the price of USO's shares. An investor may lose all or substantially all of an investment in USO. Funds that focus on a single sector generally experience greater volatility."
How much research did you do before you decided to destroy your money? I don't think people are taking enough time to learn the game before trying to play using money they can't afford to lose.
The net asset value is the total assets minus the expenses divided by the total shares. So if you have 1 million dollars in assets and half a million dollar in expenses in one year with 1 million shares, your NAV is $0.5/share. ETF prices usually match the NAV and people usually don't want to pay/sell more/less than the NAV. You are seeing losses because the NAV is going to shit and prices reflect that.
you are missing the big picture man. Yes on the official page everything thing is made clear but they market to dumbass stock traders like me via paid marketing websites that mis-represent ETFs as similar to stocks when in actuality they are just positions that bleed constantly and do not hold value
"learn the game"
I agree with you there. ETFs are pure gambling
my money went to shit because proshares misrepresent their investment. Oil droped 44% from when i bought USO but my position dropped 60%
You do realize that not all ETFs are leveraged inverse commodity plays, right?
I mean, I honestly do feel badly that you got burned by using a short term commodity fund as a long term investment. But your lack of due diligence is not the fault of anyone marketing ETFs.
For the record, there are plenty of pretty boring index/commodity ETFs that actually hold the underlying assets with no leverage and low expense ratios. Do some research on SPY, GLD, SLV, or IWM.
>my money went to shit because proshares misrepresent their investment. Oil droped 44% from when i bought USO but my position dropped 60%
What index are you using to measure that oil went down 44%?
>proshares misrepresent their investment
From page 2 of the USO prospectus:
"...absent the impact of the overall movement in crude oil prices the value of the benchmark contract would tend to decline as it nears expiration."
Nothing was misrepresented. They pretty clearly spell out that over time the value of the fund will tend to be eroded. Over the short term, large moves in the price of oil would generate value.
Since you are a self described dumbass stock trader, I can see where the prospectus could be overwhelming. But you only need to make it to page 2, where a large bold boxed paragraph with a bold heading of "Correlation Risk" explains that USO does not, in fact, track the price of crude oil over long periods of time.
But let's assume that you didn't understand what was written in the prospectus. A simple yahoo chart of USO vs spot crude prices over a 5 year period would have pretty clearly showed what the prospectus was trying to tell you. History doesn't lie.
You did not understand what you were buying. That is not Proshares fault, or anyone else but your own.
This is why I played with a paper account for a year first. In theory I was up about 33% but after fees and getting screwed on the spread and slow execution from the broker I was barely break even.
And OP it's contango not contigo. Contigo is spanish.
>Yes on the official page everything thing is made clear
I'm saying the real page is legit but they advertise on splash pages that misrepresent the position. They know prospectuses are like instructions. Not many people read them.
Well, if your investment strategy relies on splash advertisements as your sole source of investment research, I would suggest your past performance will be indicative of future results.
I felt bad at first but..
>They know prospectuses are like instructions. Not many people read them.
Also, I'll go ahead and give you this free tip.
SH will not track 1:1 with the inverse return of the S&P 500 over time. I won't bother explaining why, because you clearly don't care or can't understand. But it won't.
Everything you've done is high risk, try some bonds and CDs.
Also try to think aboout knock on effects. Oil is low at the moment so fuel is cheap so maybe the transport industry has cheap operating costs atm. Did the usual oil investors flee to gold? Does that mean that its price is going to go down when they return to the stock market?
12k, so added to the 4k and a bit of losses in that screenshot, you're down over 16k, and you have about 17k left. Nearly 50% losses in what, a year, I'm guessing? Holy fucking shit. You've been going around buying high-risk investments at their peak, now you want to get in to oil again at a time when pretty much everybody expects it to continue falling. You're an actual moron, stop what you're doing before you lose the lot.
Never hold a leveraged ETF/ETN past one week, they restructure daily because they are comprised of high risk future and options contracts. That and the associated fees, cause the returns degradation over time. Leveraged ETFs are not suitable for most investors unless you're willing to take large short-term risks.
Futures and ETFs are completely different instruments, but one is not fundamentally "riskier" than the other. The difference is trading an ETF is like trading a stock, where future trading is a price defined contract where you hold rights to a stock/commodity for a set price.
No 1x short does not leak out. Your holdings page prolly not updating correctly.
Even SP500 3x leverage does not leak out a shit in a year.
Oil etfs are known for not trackin as accurate.
hasnt leaked a bit in 3 months
I would like to provide everyone with an update. I have liqufied the 17k i had in schwab and am opening up a futures trading account with Etrade so that i can buy a long position in crude oil without the position bleeding an obscene amount of value every week.
I mean if i buy an oil future for one year and oil returns to 50/USD a barrel from 30/USD a barrel. I will make money right?
Will i have to re-buy the future every month due to it expiring? then i will bleed some money
You will have the right to buy oil at whatever price you agree to at whatever time frame you buy for. You can then sell that right to someone else.
So yes essentially you make money if it goes up in the interim, but what makes you think you know anything more about the oil market than you do the natural gas market?
Oil is more likely to hit $10 a barrel this year than it is to hit $50 a barrel. If you're really convinced that oil will recover then buy shares in BP or something. Really though, I'd recommend that you just stop before you lose everything.