Friday, October 10, 2008

Taking out the DOG...


My portfolio is down like everyone else's.

Instead of adding any new regular stock positions, I bought DOG.

DOG is an ETF that is the inverse of the Dow index.  So it goes up when the Dow goes down, and vice versa.

Needless to say, I wish I had bought it at the beginning of the year.  It is up about 50% for the year.

Anyway, I bought some on Wednesday for $79.22/share and bought some more today at $87.66 per share.

Who knows - maybe we are at the bottom and the stock market will only go up from here.  If so, this position will lose money while my others gain.

On the other hand, if the market keeps going down, at least the gains will offset the bleeding. 

You can find more interesting ProShare Funds here.

They have funds for most major indexes that return two times, negative one times, and negative two times all major indices.

For example, DOG returns the reverse of the Dow, DDM returns two times the Dow, and DXD returns two times the reverse of the Dow.

So, for example, while DOG is up about 50% for the year, DXD is up around 118%.  DDM is down 61%.

DIA, which returns the Dow, is down 34%.

I would be careful about using the double ETFs, because of the leverage.

3 comments:

Alex - My Trader's Journal said...

Nice move. I've been buying puts lately to hedge, the whole time wishing I did it two months ago.

Admin said...

excellent writing... keep it up ... I will add this to my blog carnival.

Sherin
http://investinternals.blogspot.com

enoughwealth@yahoo.com said...

I bought enough Index puts options early last year to "lock in" my portfolio gains without having to sell up and realise capital gains, but then I didn't get around to replacing them when they expired in Dec. D'Oh!

I almost bought some put options in March when the market had recovered slightly and was 'only' down about 10% from it's Dec peak, but then decided that it *might* have bottomed out already, so it wasn't worth buying "insurance". Double D'Oh!

Now I really, really hope it's too late to try to profit from the market dropping much further.