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Perusing the 179-page prospectus of Credit Suisse’s VelocityShares’ daily inverse Vix short-term exchange traded note (XIV) reveals several warnings that an 80 per cent loss in a day could result in its closure.
Това е готино. Не забравяйте какво казва дедо Бъфет - инвеститорите да не се правят на много умни като използват ливъридж.
“There has been a major concern about an unwind in an inverse ETF . . . with volatility spiking higher,” said Jerry Lucas, a senior strategist at UBS Wealth Management’s chief investment office.
Providers of volatility ETPs have previously defended the role of their instruments in the market, downplaying the potential for adverse effects while noting in disclosures to investors that they could end up losing large amounts of money.
“This is a byproduct of a low-rate era where people are looking for money and will use leverage or take excessive risk to get it,” said Brad Golding, a portfolio manager at Christofferson, Robb & Co. “It is a frothy era where people are confusing using leverage with being smart. Everyone knew these things were going to blow up. It was just a matter of when.”
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