December 28, 2008 12:09 am
1. If you are playing the commodity funds, that hold futures contracts, make sure you understand both contago and backwardation. Looking at the future price of a commodity and seeing them higher than the present; might actually lose you money being long. The converse would also apply.
2. If you bought both the long and short ETF, you should come out about even, or more under any circumstance, right. Not the truth at all. That would be true if one fund only went up, and one went down. The more volatility there is the more you would lose. If you own something that goes up and down 10% continuously you eventually end up with nothing. IF you own both funds that is also true. Start with 10 dollars and you see what I mean. With double ETF's and this type of market volatility, the effect is real.
Day trade them, use them to hedge other positions in volatility, do not own them long term like a stock. Run your own numbers on a spread sheet. You can down load an excel file of the historical NAV's from horizon and play with the numbers very easily to see what I mean.
Feel free to correct me, but don't give me a pumper/ basher unthought out reply. I'm merely pointing out some facts for others to check for themselves.