Update: Direxion 3x ETFs

Direxion continues to issue more 3x ETFs. Some of their listed symbols aren't trading yet, however, so here's the lastest list of those that are trading currently, as of 4.20.09

Large Cap: BGU (long), BGZ (short)
Small Cap: TNA (long), TZA (short)
Financials: FAS (long), FAZ (short) - huge volume lately
Energy: ERX (long), ERY (short)
Technology: TYH (long), TYP (short)

[Newer funds]
Mid Cap: MWN (short) - MWJ appears to not be trading
Emerging Markets: EDC (long), EDZ (short)
Developed Markets: DZK( long), DPK (short)

Just equity funds for now, the bond funds are giving me errors and don't interest me anyway. Giving someone money (a bond) seems not only insane these days, but will also not give the same possible gains as the 3x stock funds.

IF you don't want this much risk, stick with the 1x funds, such as DIA, SPY, XLF, XLE - just remember that with the 2x-3x funds you can get the same kick with less cash, so you really free up cash by using these.

UltraFunds Explode Up on Wells Thursday 4.09.09

These are some index changes, and ETF changes on what I'm calling "Wells Thursday", 4.09.09, as the market rose 3%+ on unexpected earnings from Wells Fargo.

Dow +3.1%@8083, SP500 +3.8%@857, Nasdaq +3.9%@1653

Here are the ETF price changes for that day alone:

LONG ETFS

Index Chg
DIA 3.22%
SPY 3.97%
QQQQ 3.10%
IWM 5.86%
MDY 5.26%
2x Indx
DDM 5.96%
SSO 7.87%
QLD 5.99%
MVV 10.67%
SAA 11.90%
UWM 10.90%
3x Long
BGU 11.73%
ERX 7.51%
FAS 40.71%
TNA 16.44%

Sectors Long
UYM 9.11%
UGE 2.85%
UCC 5.27%
UYG 23.84%
RXL 1.31%
UXI 11.39%
DIG 4.73%
URE 24.64%
USD 9.51%
ROM 6.13%
UPW 0.30%


SHORTS ETFs

Index
DOG -3.18%
SH -3.90%
PSQ -3.06%
RWM -5.45%
MYY -5.33%
2x Index
DXD -6.45%
SDS -7.86%
QID -6.13%
MZZ -10.49%
SDD -12.09%
TWM -11.29%
3x Short
BGZ -11.74%
EDZ -12.76%
ERY -7.15%
FAZ -41.20%
TZA -16.05%

Sectors-Short
SMN -9.79%
SZK -2.86%
SCC -5.35%
SKF -26.71%
RXD -2.25%
SIJ -10.84%
DUG -5.55%
SRS -23.96%
SSG -9.23%
REW -6.35%
SDP -0.57%

How to Use ETFs in Your Portfolio

ETF stands for Exchange Traded Fund. Rather than a traditional mutual fund, these are funds that are on a stock exhange that look, work, and trade like stocks. Some represent a basket of stocks, some mirror an index by trading futures in that index, while some may short stocks or futures. There are several advantages with ETFs over traditional mutual funds:

• They trade instantly, no waiting for the day’s closing price at 4 p.m.
  
• You can buy or sell them with limit orders and have stop loss orders there to protect your investment from a large drop
  
• Many are offered that give you double or triple the underlying index value’s daily change, so you have additional leverage with your money
  
• Many allow you to short either a market index or a stock sector
  
• You can buy them in an IRA or 401k and thus can short stocks that way, benefitting from falling prices with a rising price in the short ETF. You cannot short stocks in a retirement account, because if they move against you (up), you would owe additional funds.
  
• You can use a sector specific ETF to hedge stock positions and have corresponding sell orders in place in all positions
  

Traditional mutual funds don’t allow any of these, you can’t have a preset sell price (stop loss), you can’t buy at a specific price, you don’t get the immediate value when you buy or sell. On top of the mechanics of trading them, traditional funds will usually cost more in fees when you get out than an ETF will, which will trade at the cost of a stock’s trade commission. On Black Monday in 1987, when the market plunged at the open, those who sold mutual funds had to wait until the 4 p.m. prices, which was at the day’s lows, down over 20% on average for that day alone. People, like me, who sold stock at the open had their cash immediately and avoided the day’s plunge.

You can use ETFs for various investment purposes:

• You can use them for investing rather than trying to pick individual stocks
  
• You can buy into or short an entire sector, such as financials, with one trade
  
• You can use them to hedge stock positions, such as using a financial short ETF to protect a long position in financial stocks, or a short index ETF to protect all your long positions at once
  
• You can buy the ‘market’ with an SP500 fund, or short the ‘market’ the same way
  
• You can lessen your risk because there’s no chance of bankruptcy or a bad earnings forecast such as may occur with individual stocks
  
• They allow beginners to safely learn how to trade while remaining diversified without having to analyze individual stocks
  

ETFs have succeeded because of all these advantages. Most now trade millions of shares per day, and I would avoid those that still trade below 100,000 shares daily, which is called liquidity. For beginning investors, these offer the safest way to learn how to trade the stock market with the least risk. Simply buy a long or short S&P500 or Dow 30 fund, put in a stop loss order to protect yourself from a big loss, and you have easily started down the road to safer investing.

Ultra Funds 08 Total Returns

Exchange Traded Short UltraFunds
Total Returns for 2008 (with dividends)

________________________

2x Index
DXD 47.07%
SDS 62.16%
QID 77.78%
MZZ 51.00%
SDD 29.56%
TWM 61.74%

________________________

2x Sectors
SMN 61.82% (Basic Mtrls)
SZK 47.94%
SCC 39.54%
SKF 3.67% (financials)
RXD 35.29%
SIJ 82.06% (industrials)
DUG -7.62%
SRS -51.82%
SSG 110.36% (semiconductors)
REW 96.56% (technology)
SDP 43.54%

___________________________________________

Exchange Traded Long UltraFunds
2008 Total Returns

________________________

Stock Index ETFs
DIA -32.02%
SPY -36.45%
QQQQ -41.66%
IWM -34.44%
MDY -36.24%
________________________

2x Index Longs
DDM -61.37%
SSO -67.60%
QLD -72.87%
MVV -67.45%
SAA -62.01%
UWM -66.72%

________________________

2x Sector Longs
UYM -78.15% (basic mtrls)
UGE -51.00%
UCC -60.57%
UYG -84.69% (financials)
RXL -47.65%
UXI -69.99%
DIG -69.72%
URE -79.16% (real estate)
USD -79.44% (semiconductors)
ROM -73.24%
UPW -58.30%
_______________________________

New 3x ETFs from Direxion

There are now some 3x leveraged funds (called "Direxion") available.
Here are the sectors they cover:

BGU = Ultra Long Large Cap (Russell 1000)
BGZ = Ultra Short Large Cap (Russell 1000)

TNA = Ultra Long Small Cap (Russell 2000)
TZA = Ultra Short Small Cap (Russell 2000)

FAS = Ultra Long Financials
FAZ = Ultra Short Financials

ERX = Ultra Long Energy
ERY = Ultra Short Energy

By 2009, now trading in the millions of shares daily.

Updown Virtual Stock Trading Site - Pays Money!

Updown is a stock trading simulation site, you begin with a virtual portfolio of one million (dollars, not pesos) and you can trade real-time in any exchange listed stock. In addition to having your own portfolio, you can also start trading groups, create friends lists, find stock analyses, start or participate in contests, and exchange messages on the site. It's a great way to improve your trading skills without any risk, and a great way to meet other traders, to exchange ideas, impart your own wisdom, or just argue. The site also allows and sponsors short-term trading contests, and pays real money per month for those traders that handily beat the SP500 for that month.

I've been there well over a year now. It's a lot of fun, it's FREE, give it a try - you'll be GLAD you did!

.. Enjoy! -- the Jman ..

The Ultra Short ETF Reference

We like the Proshares Ultrafunds, which provide 200% of an underlying index or sector's move. The ultrashort funds are especially useful as a hedge against holding some stocks long, or for just market protection without the problem of the premiums or time expiration of options. If you're going to hold an index or sector fund, you may as well put in just half the capital for the same investment size.

Here's a list of the trading symbols for the UltraShort funds:
DXD = Dow 30
SDS = SP 500
QID = Nasdaq 100
MZZ = SP Midcap 400
SDD = SP Smallcap 600
TWM = Russell 2000

These are the UltraShort sector funds:
SMN = Basic Materials
SZK = Consumer Goods
SCC = Consumer Services
SKF = Financials
RXD = Health Care
SIJ = Industrials
DUG = Oil and Gas
SRS = Real Estate
SSG = Semiconductors
REW = Technology
SDP = Utilities

These are UltraShort International funds:
EFU = MSCI EAFE
EEV = MSCI Emerging Markets
FXP = FTSE/Xinhua China 25 (FXI)
EWV = MSCI Japan

Most have grown in volume and liquidity, but they keep adding new ones, and we'll update this reference, but sometimes the new funds take awhile to build up volume and you may get wider trading spreads.