Personal Finance

Hou!!! dont understand what s happening

  • Last Updated:
  • Jan 25th, 2009 6:26 pm
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[OP]
Member
Dec 9, 2007
296 posts
56 upvotes
Montreal

Hou!!! dont understand what s happening

i bought this betapro a month ago when the oil was at 43$. now the oil is at 46$ but i m down 30% with HOU!!!!
any explanations guys??
thank s
8 replies
Deal Addict
Feb 9, 2005
4167 posts
14 upvotes
tbtaoufiq wrote:
Jan 23rd, 2009 5:50 pm
i bought this betapro a month ago when the oil was at 43$. now the oil is at 46$ but i m down 30% with HOU!!!!
any explanations guys??
thank s
Google "Constant Leverage Trap".
Deal Addict
Oct 13, 2006
1877 posts
424 upvotes
Burnaby
beware of the contago. hou only tracks the daily performance of oil. feb contracts expired on the 20th i believe and rolled over to march contracts. when feb contracts expired oil was around $38 a barrel and hou was $8. When march contracts took over, contracts were around $42 a barrel and hou was $8.
Jr. Member
User avatar
Jan 20, 2007
127 posts
29 upvotes
its unbeleivable how investors are not educating themselves on the equities their trading....just stick to scrath and win
Member
Jan 20, 2007
464 posts
118 upvotes
Niagara
tbtaoufiq wrote:
Jan 23rd, 2009 5:50 pm
i bought this betapro a month ago when the oil was at 43$. now the oil is at 46$ but i m down 30% with HOU!!!!
any explanations guys??
thank s
betapros aren't buy and hold. sometimes even having them for an hour is too long. get in, get out. And as soon as your buy order gets filled, place a stop-loss sell order.
Deal Expert
User avatar
Apr 21, 2004
50593 posts
15360 upvotes
amplified wrote:
Jan 23rd, 2009 7:14 pm
beware of the contago. hou only tracks the daily performance of oil. feb contracts expired on the 20th i believe and rolled over to march contracts. when feb contracts expired oil was around $38 a barrel and hou was $8. When march contracts took over, contracts were around $42 a barrel and hou was $8.
Thanks for the info. I was just going to ask about contago and ETF's on commodities. So the price of the unit is locked to a commodity index and not the actual underlying?
[OP]
Member
Dec 9, 2007
296 posts
56 upvotes
Montreal
NewDad5 wrote:
Jan 23rd, 2009 8:33 pm
its unbeleivable how investors are not educating themselves on the equities their trading....just stick to scrath and win
this kind of comment doesn t help, so you can keep it for your self next time.
Member
Jun 2, 2006
327 posts
13 upvotes
Toronto
hou tracks daily moves in oil price and rebalances every day accordingly. if oil moves sideways for 2 months on a leveraged etf u lose that much money as it tracks daily moves... has nothing to do with contango cause when the front month changes it still tracks just the daily move from open to close then rebalances.. hope this helps
Deal Expert
User avatar
Dec 11, 2005
19035 posts
1493 upvotes
NewDad5 wrote:
Jan 23rd, 2009 8:33 pm
its unbeleivable how investors are not educating themselves on the equities their trading....just stick to scrath and win
tbtaoufiq wrote:
Jan 25th, 2009 10:59 am
this kind of comment doesn t help, so you can keep it for your self next time.
Actually he is 100% right. I find it hard to believe someone could buy an ETF without even knowing what it is tracking to the fact that it is doubly leveraged.

You've got to know what is in your portfolio, and understand what every type of investment in it constis of. If you find this too difficult or takes too much of your time then pay a financial adviser, or stick to something extremely simple like the TD e-Fund auto balencing portfolio.
To be nobody but yourself - in a world which is doing its best, night and day, to make you everybody else - means to fight the hardest battle which any human being can fight; and never stop fighting. -- E. E. Cummings

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