Latins Quiet About Madoff Losses - WSJ.com
It is curious that so many banks and other institutional investors (including the feeder funds) were duped by the Madoff scam. It shows that as do-it-yourselfers try to learn and do a better job managing their portfolios mistakes and laziness occurs at the highest levels of finance. Obviously greed is an ingredient in there somewhere too.
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4 comments:
Roger,
In the past you had indicated that you may use the SDS as ahedge position for client portfolios. Attached is yet another article that advocates against using thee instruments. It seems like one would be better off writing covered call positions and no longer using these ultrashort ETF's? Thoughts?
http://seekingalpha.com/article/112415-more-proshares-ultrashorts-tomfoolery
double short funds are not perfect but neither is selling calls as a downside protective strategy. the market at its worst had cut in half. assuming you wouldn't sell deep in the money calls against your stock a year ago, how much protection could you have gotten and for what time period? after looking at that, then compare the move up in SDS, including the divs along the way, can you even construct a back test where covered calls come anywhere close to the protection of double short funds, flawed as they are?
Do the writers of those articles have any holdings that are up 38% YTD?
At least this guy discloses that he held it. He then goes on to explain how he's not smart enough to understand what the ETF actually does - even though he says he read the prospectus. Some of the comments were certainly interesting.
You should post and ask if the guy would be whining if he'd made more money on the trade or if he'd sold after his money tripled, instead of continuing to hold.
EEV pushed up to $130 recently. So, had someone sold in the last move up they would have had a healthy gain. Not sure why he didn't and now he's upset.
Maybe he should have done the double-short analysis when he bought so as to create a better exit strategy.
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