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Pastimes : The Justa and Lars Honors Bob Brinker Investment Club Thread -- Ignore unavailable to you. Want to Upgrade?

To: Gersh Avery who wrote (583)	7/30/2000 2:44:58 PM
From: set	Respond to of 10065

> trying to catch up You might begin by looking for one that made a new high as the nasdaq bottomed in May. USPIX, the one I was in :(, did not. VIX was uncharacteristically low at the time, if you recall, and that may have had an adverse effect on the leveraged short funds. But that's a guess. I don't have a handle on how these things erode and why. Answering that, there may be something to choose between them.

To: Gersh Avery who wrote (583)	7/30/2000 3:02:44 PM
From: Dave Shares	Read Replies (1) \| Respond to of 10065

Gersh, I trade USPIX frequently. As you probably know, it is a leveraged fund. As such, you must be very careful trading it. You MUST get in at a top and get out near a bottom. Getting in wrong and getting out wrong kills the trade. The longer you stay in, with the market swinging in both directions, even with a downward bias, the poorer the return. I say this because it is simple math. If you get in wrong and NDX moves up 5%, you are down 10% out of the box and need a NDX move back of 5.5 % just to get even. If you get in right, and ride NDX down 5% in a straight move (no up days), you are off to a good start and are 10% ahead, but if NDX rallies 5% in one day, you are down 1% and NDX is flat. I could play with the numbers forever, but will not bore you with them, the point is simple, TIMING IS EVERYTHING WITH A LEVERAGED FUND. I truly believe that over time, a leveraged fund, except in a straight move, will underperform how it is supposed to track the index. Over time, there is no way that USPIX will track 2x NDX inversely. Alternatively, using a 1:1 fund like POTSX will not give you the pop when you are right with the timing, but is more forgiving when your timing is not perfect. Just something to consider from someone who has done it right and wrong. David