Leveraged Long/Short ETFs

The Stock Market’s Small Cap Problem

The extraordinary performance of U.S. stocks over the past six years has been like the 1960s Boston Celtics: Dominant and unbeatable. But is the tide changing? From 2009 to present the SPDR S&P 500 ETF (NYSEARCA:SPY) has gained almost +135%, while the SPDR S&P MidCap 400 ETF (NYSEARCA:MDY) surged +149.72% and the iShares S&P SmallCap 600 (NYSEARCA:IJR) jumped …

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Portfolio Management 3

Q&A: Why Can’t Leveraged ETFs be Bought and Held?

Dear ETFguide, You and just about all the other ETF specialists are very adamant about using leveraged ETFs as short-term trades only. Please comment about what I’ve done for a 5-year period of time that I’ve outlined below. I’ve been investing in the ProShares 2X leveraged S&P 500 ETF (NYSEARCA:SSO). My calculations are from charts …

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Portfolio Management 3

Rules for Trading Leveraged ETFs

If you think the stock market is a volatile place, you ought to get a load of ETFs that use leverage. From Oct. 10 to Oct. 15, the Direxion Daily S&P 500 Bull 3x ETF (NYSEARCA:SPXL) collapsed 10.07%. But from Oct. 15 through today, SPXL soared 13.40%. That’s a breathtaking swing of 23.47% from negative …

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Bubbles Floating

So this is the Bursting of the Bond Market’s Bubble?

Never mind which company Bill Gross is working at this week. The talking heads on Wall Street have been ranting about the bursting of the bond market’s bubble for years and it’s getting old. They did it in 2009. They did it in 2010. They did it in 2011. They did it in 2012. They …

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Sleeping Bear

Equity Bearishness Sinks to 20 Year Lows

Is pessimism about the stock market really as high as equity bulls claim? One measure of the stock market’s mood is the Investor’s Intelligence Sentiment Index, which offers us a compact view of how market participants feel toward stocks. The latest II data shows that bearish sentiment or pessimism toward stocks (NYSEARCA:IVV) has now hit …

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BBQ Grill 2

Treasury Doomsayers Get Grilled by Hated Rally in Bond Prices

In late 2013 just before the Federal Reserve began its scaling back on monthly Treasury bond purchases, the conventional wisdom was that interest rates would rise and bond prices would fall. Invariably, the consensus opinion was – at it has been since “quantitative easing” or QE began in 2008 – that “interest rates have nowhere …

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Fairytale

The No Market Volatility Fairytale

Has 2014 stock market volatility really gone the way of dodo birds and dinosaurs as claimed? The news du jour is that falling VIX means that stock market volatility (NYSEARCA:SPY) is non-existent. Is it true? Recent headlines give this innuendo. Here’s a tiny sample: VIX Tumbles to 9-month Lows – Zerohedge VIX Volatility Index Falls …

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Experts Get the Gold Market Wrong (again)

Two questions: How wrong have experts been about the gold market this year? And how much money has their bad advice cost people? Let’s tackle the first question, by extracting and analyzing some recent headlines: “Gold Miners Fail to Launch” – Forbes, 5/14/14 “Gold Vulnerable to Manipulative Selloff in June” – Max Keiser, 5/30/14 “Why …

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Ocean Waves

Bull Market in Borrowing: Corporate Debt Skyrockets to $9.6 Trillion

How healthy are corporate balance sheets? It depends who you ask. One news outlet said that U.S. firms are hoarding a record $1.6 trillion in cash led by Apple, Google, and Microsoft. Shockingly, that same report made no mention of corporate debt levels, which are also at all-time records. During the previous 2009 recession high, …

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Gold and Silver Bars

How to Print Money in the Psychotic Gold Market

The gold market is the epitome of human psychosis.* On one hand, there’s the anti-gold camp that have utter disdain for precious metals 24 hours a day, eight days a week. On the other hand, there are the survivalist types, general goldbugs, and anti-Fed clan who live, breath, and eat gold at any price. Together, …

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Gambling Roulette

What Does a Professional Gambler’s Investment Portfolio Look Like?

I’ve always wondered what a professional gambler’s portfolio would look like. Would it be a broadly diversified portfolio of penny stocks with a Kenny Rogers box set and a shot of whiskey to boot? Or perhaps, it would contain none of these worldly possessions. How would a gambler invest his or her winnings? I recently …

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BBQ Grill 2

Treasury Bonds Sizzle, High Tech Fizzles

What do you get when you add up Twitter, Yelp, and Weibo? Answer: Deflation. That’s the latest joke as former high-flying tech stocks fizzle, while Treasury bonds sizzle. Over the past several weeks we’ve seen a major shift in the market’s psychology away from risky equity bets. And as these high risk/high beta equity segments …

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4 Bold-Faced Lies about High Frequency Trading

FULL DISCLOSURE: I was once in the camp of high-frequency trading (HFT) supporters. But that changed on May 6, 2010 after the U.S stock market’s “Flash Crash.” After studying the arguments and facts, I’ve now come to realize the existence of HFTs is unlawful and is a direct threat to the fairness and stability of …

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Rigging the Stock Market is Old Hat

Is the latest revelation of stock market manipulation by high-speed traders via a just released 60 Minutes report really new? Before Michael Lewis’ latest book “Flash Boys,” there was “Wall Street Jungle” – a 1970 bestseller by Richard Ney. Although Ney’s insightful book was written in an era before the dominance of electronic trading, his …

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Are Chinese Stocks Really a Bargain?

Chinese stocks are the bargain of a lifetime. That’s what pundits from Goldman Sachs to analysts at major media outlets have been reporting. Are they right? The resurgence of borrowing money, led by world governments, has pushed global debt levels up 40% from $70 trillion in 2007 to around $100 trillion today. And while the …

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Chinese Stocks are a Wonderful Value Trap

When it comes to properly assessing China’s stock market, are financial experts bad or just blind? Here’s what they’ve been saying: Buck the Trend, Buy Chinese Stocks – Forbes, Jim Oberweis, 7/9/13 Huge Reforms in China Could Lead to Big Upside for Top Chinese Stocks – 247wallst, 11/19/13 It’s Time to Buy China – MarketWatch, …

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$17.41 Trillion in U.S. Debt, like Stocks, at Record Levels

The Russell 2000 small cap index (NYSEARCA:IWM) just made a new all-time high, but stocks aren’t the only thing topping. U.S. public debt is at record levels too and heading higher. Total outstanding public debt is now at $17.41 trillion, according to the U.S. Treasury Department’s latest daily statement. That’s almost $1 trillion over last …

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Let the Spending Spree Begin!

Debt ceilings have done little to curb the U.S. government’s escalating debt load and if you thought overspending was a serious problem before, welcome to the next cycle. That’s because U.S. politicians just approved a bill that suspends the government’s borrowing limit until March 16, 2015. That means no more last minute showdowns about a …

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Emerging Markets and Parallels to the pre-2008 Crash

Are there parallels between the pre-2008 U.S. stock market crash and emerging markets today? Emerging market bulls (NYSEARCA:EDC) say that cheap market valuations are a reason to own stocks from countries like China (NYSEARCA:FXI), Brazil (NYSEARCA:EWZ), Russia (NYSEARCA:RSX), and India (NYSEARCA:EPI). Are they right? AUDIO: Listen to Ron DeLegge @ The Index Investing Show A …

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