Why ETF’s Are Great (Until They’re Not)

Let me give you about 2,885 Words of Caution.  Yes, this morning’s Peoplenomics runs a little longer than usual.  But with good reason.

You see, I’m going to show you why in a Crash, you may not want to be playing in the levered ETF game. 

That bit of bad news aside, we do have alternatives for how to “make a killing” on the way down.

First, though, a few headlines and our charts which all by themselves is worth the price of admission.

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Comments

Why ETF’s Are Great (Until They’re Not) — 12 Comments

  1. about singing fat ladies: George you do realize that is hate speech these days doncha? I think “well fed” might might be the appropriate mitigation for the “snowflakes.”

    • I apologize if I have off-ended any of them spewflakes.
      Hereinafter I shall refer to excessively famine-prepared ladies of exceptional aural skills.

  2. George, enjoyed the ETF stuff and understand, but I do have a question on the Gold. To me we are looking at a Full Blown Depression sort of like the 1920 area. What did gold (physical) and gold stocks do. As physical gold was pegged it is probably not a valid question unless we look overseas.
    Enjoy life and don’t worry to much as we all leave in a Pine Box, or whatever. Just do your best to be nice.

    • About that :”pine box” exit – see Coping this AM.
      As for gold, I don’t have enough overseas data, but we do know that BOTH gold and silver were called/confiscated by the Govt – and this time around they will likely include anything readily fungible – so gold, silver, precious metals in general plus crypto currencies – anything they can grab to recycle into fed debt…

      • Don’t know if the story of Hilton buying his first hotel in post war Germany with an American $20 gold piece he’d been tipped by a tourist is true or not but it shows the power of a store of value totally free of government, sorry, bankster control.

  3. Thank you George for you knowledge and advice. That being said, I might go to the casino using your guidelines from 5 years ago which i found worked. Regards and enjoy this upcoming weekend. Dave Sherlyn, we keep learning.

  4. I am with Sherlyn I really enjoyed today’s article. I to am in the same boat she is in.. I always worked in positions where a substantial income wasn’t available I did do some investing but with health issues and medical bills well they wiped that out almost instantly..

    I am afraid of what is coming.. I remember the stories my father and mother told me of their life during the dirty thirties and the great depression. My father lived in an area of chicago where he had to work sorting fruit and as a shoe shine boy to get food and one of the more famous gansters would actually drop off food for the people in the neighborhood so that the people could eat.. My mother her parents weren’t that lucky..
    He told me a story that his dad told him about the depression in germany. How there was a family a really wealthy family and the father after passing had left half of his wealth to each of his two children.. one was a party person and blew his inheritance on wine and women a fast and furious life.. the second child had invested his money wisely.. the depression hit.. the money invested was worthless it was cheaper to burn money than buy wood ( similar to how it is in argentina etc where a loaf of bread and a cup of coffee is a months wages and in one country a one pound loaf of bread is ten million. In greece the elderly have to dive into the garbage pits for food and young ladies sell their bodies for a can of spam)
    the second of the boys that had blown his inheritance found that there was a severe shortage of glass and he had a basement full of wine bottles.
    I wonder how this depression will be.. will we be at the burn money stage.. how long can you print money before hyper inflation..
    What will the little guy do.. what will those of us that are elderly or have health issues that limit our ability to find gainful employment.. we found out the hard way a few years ago that if your in the age bracket of fifty to sixty seven that you are not employable.. the job service had told us that it was hard to admit but that that age was discriminated against. Once you were at retirement age then they would hire you..
    a lot of questions hard questions that have very difficult solutions..

  5. I enjoy reading your finance commentaries even though I haven’t studied enough to really understand them. I have never had enough money to invest, but did make an effort a few times when I thought I understood what I was doing. Every time, the result went badly for me. So, now, with living on Social Security and having little in savings, I am out of the hunt. What I do have is in cash in a credit union. I was so busted in 1987 that I didn’t even notice that crash. It will be entertaining to watch this one and I hope you will continue writing through it for our enlightenment.

    • Glad you enjoyed today’s report. It sprang from one of those ugly (yet obvious and unasked) questions: How long can an ETF pay out 3-times what it’s tracking. This morning was a start at penciling that out. Free Lunch Department isn’t going to be open forever.

      When it closes the choice is do something of real value or be ready for real misery.

      • Ive found contango and backwardation seem to often times kill anticipated gains in ETFs. Especially in those like TVIX and UVXY/SVXY. Volatility doesn’t always go as expected.

      • Which is why the longer moves – the bigger waves work best. Still, close in trading is cheaper than a flight to Vegas.