Seananigans
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Investing General Discussion
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Big Phoenix
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Anything wrong with holding leveraged etfs more than a day? I understand their nature doesnt make gains/losses 1:1 when you hold longer than a day but anything special besides that?
Thinking about picking up some nvds which is 1.25x inverse of nvidia.
Thinking about picking up some nvds which is 1.25x inverse of nvidia.
Mist
Eeyore Enthusiast
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I asked the same question. Nothing particularly bad, but doing it for a single security sounds stupidly risky, particularly one with this much hype. SQQQ is probably a better play if you expect tech in general to crash back down again.
Aldarion
Egg Nazi
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decay over time is wildly overestimated, especially on a little barely leveraged ETF like NVDS
Dont hold them years
My NVDS is a week or so old, I'll probably sell in the next couple days. not cause holding longer would be too risky but because its already a small profit and thats my current MO - take the shitty little profits on a regular basis
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I'm going to try to avoid getting into the weeds and using terms like contango amd backwardation. In short, it's all about decay. The underlying products that create these leveraged investments decay over time. The mechanics that make these instruments work have decay as a byproduct. If a VIX ETN or the SQQQ were measured for a year and their underlying index was perfectly flat over that year, those two instruments would actually end lower (even though the index they are tracking was totally flat).
Tldr, they are ok for a short term hold, but decay will eat you up over time.
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It's not that the decay = risk, its that it's there and this is generally bad for longs over time. And you are right, it's not massive decay, but it is decay. Shorting the VIX ETNs was the absolute best investment you could make in 2017 or 2018 (I forget). It's decay made shorting in a bull market an auto win. Until it wasn't.decay over time is wildly overestimated, especially on a little barely leveraged ETF like NVDS
Dont hold them years
My NVDS is a week or so old, I'll probably sell in the next couple days. not cause holding longer would be too risky but because its already a small profit and thats my current MO - take the shitty little profits on a regular basis
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Asshat wormie
2023 Asshat Award Winner
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Aldarion
Egg Nazi
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Yeah I don't disagree at all about the mechanics youre describing. I'm just saying that I constantly run into people who act like the decay will eat your profit if you hold longer than 1 day.
The magnitude of the decay is all I was quibbling over. I find that many people overestimate it. I wish there was quantitative information readily available (e.g. "decays by 0.001% per day" or whatever). Maybe that exists somewhere out there?
The magnitude of the decay is all I was quibbling over. I find that many people overestimate it. I wish there was quantitative information readily available (e.g. "decays by 0.001% per day" or whatever). Maybe that exists somewhere out there?
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Big Phoenix
Pronouns: zie/zhem/zer
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Those moon runes known as macd and rsi seem to be saying something.
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Gravel
Mr. Poopybutthole
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Yes, just about at the very top (October 29, 2021).
The 20% haircut last year definitely hurt. Badly. But the reality is also that we only pulled out what we needed for 2023's expenses (and if you look at my posts in December, I actually pulled out less with the intention to sell enough for the last 2-4 months of 2023 during the year; probably sometime around August/September). And what it amounts to is withdrawing maybe an extra $5k more than we normally would have.
I'm not super worried yet. Honestly, worst case scenario is I go get a job for another year two. But I've also been able to be retired for almost two years before I turned 40.
I've talked about making a FIRE thread at some point but I'm just too lazy to actually do it. Maybe one day.
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Gravel
Mr. Poopybutthole
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Who knows. No one but Paul Pelosi. Janet Powell could pull a takeout and raise rates again this month instead of pausing and the markets would absolutely puke.
A lot of money is short but all that means if they are wrong it's the mother of all short squeezes. Buy quality and hold it and you are less likely to be disappointed.
A lot of money is short but all that means if they are wrong it's the mother of all short squeezes. Buy quality and hold it and you are less likely to be disappointed.
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Jysin
Ahn'Qiraj Raider
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I love reading FIRE stories. People need to be more aware and read the success stories to make their own lifestyle changes.
Glad things are working out for you despite the market downturn. Just keep spending light during the downmarkets, you should come through just fine.
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Jysin
Ahn'Qiraj Raider
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Re short positions, you've got to be juggling a lot of macro data to make sense of it all. There are many moving parts. The single greatest differentiating factor today vs 2007 is QT. We have a Fed raising rates and a tightening of liquidity. Banks are also feeling the pinch and tightening their lending. Just this (or last) week, the big banks were told they need more cash on hand. You've got Yellen expected to unleash about $400B in tbills this month. All of this vacuums liquidity from the markets. I have no idea what Powell will do next week. You have banks that have previously paused / signaled the end of hikes, but came out and surprise hiked this & last week. (Canada and Australia). Should Powell actually be pausing "skipping" or whatever they want to call it when markets have given the all clear? Jobs are strong, market is strong.. why are you skipping?
The overall market trend I see is bullish, especially given yesterday. Tech was beat up, but we saw large inflows to IWM (small caps). This validates the rotation theory. Market participats were taking profits from the tech run, and reinvesting it to the laggards in small / medium names. You can not have a new bull market with just a handful of mega cap names pulling the indexes up when the breadth is awful, meaning, big gains on a handful of heavy weighted names in the index, while the vast majority of the rest of the index in the red. You want everything rising together.
How long this lasts is anyone's guess. A surprise hike or a CPI surprise to the upside can flip the market on its head again. But so long as we see the market breadth improving, you want to be involved. If you have missed out entirely on the tech run-up and are ultra conservative in your investing, 3-6mo tbills is not a bad place to park cash when they are paying out >5-6%. Absolute risk free and buys time to let this inflation / recession or new bull market play out a bit longer.
The overall market trend I see is bullish, especially given yesterday. Tech was beat up, but we saw large inflows to IWM (small caps). This validates the rotation theory. Market participats were taking profits from the tech run, and reinvesting it to the laggards in small / medium names. You can not have a new bull market with just a handful of mega cap names pulling the indexes up when the breadth is awful, meaning, big gains on a handful of heavy weighted names in the index, while the vast majority of the rest of the index in the red. You want everything rising together.
How long this lasts is anyone's guess. A surprise hike or a CPI surprise to the upside can flip the market on its head again. But so long as we see the market breadth improving, you want to be involved. If you have missed out entirely on the tech run-up and are ultra conservative in your investing, 3-6mo tbills is not a bad place to park cash when they are paying out >5-6%. Absolute risk free and buys time to let this inflation / recession or new bull market play out a bit longer.
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Big Phoenix
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Lambourne
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+1 on any FIRE stories, I discovered Mr Money Moustache's teachings about 8 years ago and although I never went to the point of growing my own potatoes or giving up my BMW for a shitbox, it's helped me learn a lot about money management. Interested in investing experiences in particular since I'm now at a stage where I have zero debt outside of a small mortgage and I have enough cash in the bank that I need to start putting it to work. Already bought some ETFs and some defensive stuff like Pepsi but it's little more than a toe in the water at this point.
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Jysin
Ahn'Qiraj Raider
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Dip your toes with something easy like a 1month treasury. Sure the yield has come down in the last weeks, but that's not the point. The point is actually seeing your money working for you and getting a chunk of money at the end of the month. Can't remember which finance person said it (maybe moustache), but think of each dollar as a little worker. Get more little workers out working for you. It gets addicting once passive income starts rolling in.
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