Is a Bear 3X Commodity ETF Worse than 3X Bull Commodity ETF?

Discussion in 'ETFs' started by GloriaBrown, Apr 21, 2017.

  1. Even contango seem like making 3X bull worse than 3X bear, but real historical data seem like showing bear 3X commodity etf somehow is worse than 3X bull commodity on average.

    Is there some kind of mathematically explanation showing bear 3X commodity etf is worse than 3X bull commodity in long term no matter the commodity price go up or down?
     
    murray t turtle and clorox like this.
  2. Yes, they are very complicated. You should really read everything you can find about them. They DO NOT work the same as conventional etfs.
    Too much for me to go into here, find a good source to learn about its mechanics.
     
    murray t turtle likes this.
  3. %%
    YesGB;
    but for practical purposes, really depends if its a bear market or bull market+ some stuff.In other words, when TX TEA is in a bear market, bear$ rule. TX TEA is on an uptrend, 52 week charts; SPY/S& P is mostly a bull market, so bulls rule, bulls X2, bulls X3..... FAZ[ bear trender] is >> better than FAS in a bear market ; not a prediction, wisdom is profitable to firect.
     
  4. How about when there is no trend?
     
    murray t turtle likes this.
  5. Perhaps you could explain more what you mean by the historical data showing that bear 3x etfs are worse than bull?

    Commodity prices have generally risen due to inflation so maybe there's just a bull bias to the price data?

    This is a great article on leveraged ETFs in general, btw: http://ddnum.com/articles/leveragedETFs.php The examples it uses are all stock ETFs, though.
     
    murray t turtle likes this.
  6. Sig

    Sig

    Again, you need to understand how 3X ETFs work. Your questions reveal that you don't and you're looking in the wrong direction. Their return really has almost nothing to do with the difference between the underlying price at time X and time Y as you would expect. Because they provide a daily percentage return instead of a total return like the underlying, the return over a period of more than a day is almost completely dependent on the path the commodity takes to get from price X to price Y. If you don't completely grasp this concept, then you're just randomly throwing money at these ETFs.
     
  7. Most of the long 3x commodity etf dropped a lot in years. Look at any 3x gold long etf, actually the short 3x gold etf too.
     
    murray t turtle likes this.
  8. %%
    If its not a good UP=trend or good Down=trend, GB;
    a cash market can chop -slop trend you to ribbons, 3X is 3+ times faster-worse chop slop.LOL; good question, wisdom is profitable to direct.................................................
     
  9. Well most of the commodity dont have trend most of the time and even trend is within a range
     
    murray t turtle likes this.
  10. Sig

    Sig

    What the commodity does has almost no bearing on what the 3X fund based on it does!
     
    #10     Apr 26, 2017