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Strategies & Market Trends : Ride the Tiger with CD
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To: Boolish who wrote (208822)1/2/2012 3:51:42 PM
From: Nevada9999  Read Replies (2) of 312908
 
I think the deterioration you are talking about is that related to daily rebalancing of leveraged (2x, 3x) ETF's. I think the unleveraged ETF's only drop below what they are tracking due to subtraction of fees/expenses which are negligible from a trading standpoint. GLD is below one tenth the price of gold, but not a lot considering it has been seven years. I totally agree with you on the leveraged ETF's. When you compare FAS vs. XLF, the difference is huge. I played with those for a while and they had to 10 for 1 reverse split FAS and FAZ. I avoid holding leveraged ETF's, like you said. The latest development is some of these leveraged ETF's are now rebalanced on longer time frames; monthly or quarterly instead of daily. There are some good articles out there on this that should be searchable under leveraged ETF's and rebalancing.
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