Mother of all carry trades faces an inevitable bust

[SantaClaus]

The fact that Santa has a leveraged ETF in a trust fund for a child shows (as sasguru pointed out) that he has no understanding of what he is doing.

I understand the risks involved in compounding.

However, if you can find any other way to short the stock markets from a child trust fund, then please let me know

[EternalOptimist]

The fact that Santa has a leveraged ETF in a trust fund for a child shows (as sasguru pointed out) that he has no understanding of what he is doing.

ok.
the second point though. Lets imagine that someone who knows what they are doing, makes a steady profit, are they doing any good, or simply moving money their way ?

[DimPrawn]

I understand the risks involved in compounding.

However, if you can find any other way to short the stock markets from a child trust fund, then please let me know

Mate, the ETF's are reset daily. You will lose your money, the longer you hold it above one day the more you lose.

Read up on leveraged ETF's.

They return double the change on the day, they don't work if you hold them for a week or a month or a year.

I know I bought one not understanding how they worked and lost over a period of months most of my money, even though the index went in the direction I was expecting it to!

The fact you don't understand this points you out as an amateur I'm afraid.

[SantaClaus]

Mate, the ETF's are reset daily. You will lose your money, the longer you hold it above one day the more you lose.

Read up on leveraged ETF's.

They return double the change on the day, they don't work if you hold them for a week or a month or a year.

I know I bought one not understanding how they worked and lost over a period of months most of my money, even though the index went in the direction I was expecting it to!

The fact you don't understand this points you out as an amateur I'm afraid.

Ok, I understand what you are saying now, and I am not afraid to admit when I am wrong.

I never said I was a professional investor. I daytrade for a living.
There is a big difference in the strategies involved.

[DimPrawn]

For anyone else holding leveraged ETF's.

http://seekingalpha.com/article/3119...struction-trap

They will lose you money faster than a Labour goverment.

[bobhope]

Two things:

1) As DP says, do some research on leveraged ETFs re: backwardation and contango. It's a killer in things like oil ETFs where they roll over periodically and you can easily lose money even if your view on the direction of the underlying is correct.

2) I wouldn't bother with securities type CTF, as the amount of money you can put in is limited, dealing charges, etc. I've just stuck to simple cash accs for my CTFs. Children's SIPPs are a better bet for shares.

[DimPrawn]

Two things:

1) As DP says, do some research on leveraged ETFs re: backwardation and contango. It's a killer in things like oil ETFs where they roll over periodically and you can easily lose money even if your view on the direction of the underlying is correct.

2) I wouldn't bother with securities type CTF, as the amount of money you can put in is limited, dealing charges, etc. I've just stuck to simple cash accs for my CTFs. Children's SIPPs are a better bet for shares.

Am I right in thinking a child SIPP means you child can't touch the money until their retirement age?

Can't see the sense in that. We're talking 50 years time and retirement, pensions and god know's what will be very different.

[BlasterBates]

Agree with the article. Don't bother with derivatives can work out very expensive, and often traders make a steady profit over months or years and then lose the whole lot in a short space of time. Just check out a few Investment banks and Hedge funds to see how they screw up. Even Mr Scholes who has a nobel prize and invented derivative mathematics basically lost everything in a single bet. So seems to be common place, and being mathematically savvy just increases your chances of f****ing up big time as it gives a rather dangerous feeling of confidence, you know "I understand the markets".

Listen to Warren Buffet....buy huge quantities of assets when there's a crash and not so much when they're high and steer clear of highly priced assets, i.e. those that bring miniscule returns, such as city centre appartments.

[BrilloPad]

But I think our DEc put options are probably going to be worthless...........

[DiscoStu]

But I think our DEc put options are probably going to be worthless...........

I think you could be right as long as the printing presses keep fuelling the FTSE's rise...