Short ETF

[jhc811]

To me, it is a lot easier to trade on (longer term) fundamentals than short term trading based on momentum.

It is true that Greg said that 90% of short term traders lose money. Some say 80%. But for sure it is at least 80%.

I did tried to dabble on short term trading, but it is very difficult to me (lose money most of time) and I think it is lot better to put more effort & time to understand the markets etc using longer term fundamental analysis and look for markets that are extremely undervalued or overvalued (due to manipulation as all markets are manipulated to various degrees) and looking for the grand slam home run/lottery returns using right trading vehicles.

I got burned by oil futures even though I was right fundamentally that oil was massively overpriced. I got killed by margin calls as I am unable to maintain my short positions. After I was margin call'ed to death, the oil went down from $147 to low $30's in about 6 months. (It took 6 years from $30's to $147).

I remember clearly when I saw $147 back in July 2008 and I knew it was best time to short, but I was out of money by then. Another big mistake is to bet the farm on a single market.

Longer term fundamental analysis trading and using futures as trading vehicles don't really mix well due to mind-boggling huge swings and extreme market manipulation. Goldman Sach is an obvious huge manipulator player as they clearly use mainstream financial media to push the markets around. CFTC is a flat out lapdog regulator. A wimpy pinky toothless poodle when they should be a mean bulldog to regulate the industry/markets.

Buying options on futures is better but it would require guessing the timing as options do have expiration date and guessing on timing is simply a guess.

So right now i think ETF are great trading vehicles for the average Joe Citizens like us here. It allows you to short the markets without any margin calls, any expiration dates, a likely short selling ban and all of that.

I think everyone knows that the mega banks are flat out broke, insolvent, walking dead zombies being put on life support right now. But their stock prices are out of the moon. Another bailout is out of question as the public won't let this happen again. Our govt knows it is money black hole that could bring whole Fed Govt (and taxpayers) being sucked into that hole. So it is best to unplug the life support on those "Too Big to Fail" banks and let them go broke and stay broke for good. So that is why an ETF called FAZ is one of the great speculative plays of our time right now. FAZ shorts on financial stocks. No worry about margin calls, no worry about expiration dates, no worry about possible short selling ban and so on. Just buy those shares of those ETFs and just wait until the cows come home or wait until the fat lady sings. When will it happens is anyone's guess but if I have to guess, I would say within a year, maybe two at most but again it is a guess but it is going to happen for sure (99% to me, but yeah I could be wrong, but I don't think so).

Same thing with shorting real estate using SRS, shorting gold using DZZ, shorting oil using DTO, short small caps using TZA and so on.

I can see clearly that we are in long term deflation/de-leveraging cycle (longer term fundamental analysis) so that is why I think those above ETFs should do very well.

I am looking for at least 200% up to even about maybe 2,000-5,000% ROI on those ETFs (especially FAZ).

It is true that any ETF can fail by itself due to mismanagement or any other reasons so that is risk, that is why we diversify into several ETFs.

They are speculative investments so it is wise to allocate small part of your overall liquid net worth into those speculative investments/trading. It is the money you can afford to lose looking for grand slam home run returns.

90% on conservative investments (the money you cannot afford to lose) and 10% on speculative investments seems to be a good rule. 80%/20% would do well, even 75%/25%, depending on your risk appetite.

As for conservative investments, cash and T-Bills seems to be best bet as we are in deflationary cycle right now. I also think 20 and 30 year Treasury Bonds are great investments too as interest rates will drop as we go further knee deep into the deflationary abyss. Cash/cash-like vehicles increase it's purchasing power as price of all things goes down over time.

Other thing to know is no one can guess the top or bottom of any markets consistently. So that is why we layer our positions. Like if you can allocate $10k to a speculative trade, then divide into four layers of $2,500 each, then buy $2,500 at one price point (say $30 a share) then another $2,500 at $25/share, then 3rd $2,500 at $35 a share then 4th $2,500 at either $20 or $35. Rather than trying to guess top or bottom, just layer them in (you can decide number of layers you want to lay on).

We cannot do much about the fate of USA and it's society, but at least we can do something to protect ourselves and act ahead of time.