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Pastimes : The Justa and Lars Honors Bob Brinker Investment Club Thread
VTI 320.10-1.6%Nov 20 4:00 PM EST
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To: Dave Shares who wrote (596)7/31/2000 1:50:19 AM
From: set  Read Replies (1) of 10065
 
Dave,

I believe the point you're trying to make is that
to track with leverage implies setting a time
frame around which to measure the tracking. Choosing
a day, so percentage moves are 2X or whatever it is
on a day to day basis, will not give the same results
as choosing a week or a month.

A silly example: If the index were to fall 25%, lets
say from 200 to 150, then USPIX (to keep it simple)will
rise 50%, let's say from 10 to 15. On the next day
the index goes up 25% from 150 to 187.50, and USPIX
should lose 50%, from 15 to 7.5. Then let's
say the rest of the week is small inside days and don't
amount to anything. So the net change for the week
on the NDX is down 6% while USPIX is down 25%, not up
12% as would be hoped.

Is this your point?
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