Charting Stocks

Short ETF’s are the big winners in 2008.

The following ETF’s are among the top performing index funds for all of 2008. It should come as no surprise that each of them short (bet against) the market. This bunch, in particular, actually does so by using leverage and gives the investor exposure to twice the upside (twice the downside too).

Be Careful! The returns do seem enticing, but one should take caution when investing in any ETF (whether long or short) which uses leverage. The leverage is generally obtained through swap contacts and so exposes the investor to an extra layer of risk – counter party risk. In other words, if the ETF engaged into a swap contract with a party who could not pay, the ETF could theoretically go to zero even if the underlying companies do not. Think I’m just paranoid? Check into UCR and DCR. They were two leveraged Oil ETF’s by MacroMarkets that had recently to liquidate.

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1. Inflating a Bull Market
2. Leveraged ETF’s: Heads I Lose; Tails I Lose
3. Beware of the REIT Dividend
4. 10 Sectors to Out Perform The Market in 2009
5. Campbells Soup Safer Credit Risk Than US Government