Short Housing with new Shiller ETF

Discussion in 'Stocks' started by cgtrader, May 1, 2009.


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  2. Daal


    Its supposed to be a tradable share of a 5y future. We will see how that goes
  3. great idea hope this new product works out..... boy that Beaker is so annoying.
  4. S2007S


    Would have been a nice trade to go into in 2006-2007 and 2008. I think you can still play the downside in housing however I don't believe you will able to catch the drop we have seen over the last 24 months. I think a continued drop is in on the table for this index but to go long these etfs will not work since there will not be a "V", "W", or "U" shaped recovery. I'm thinking more of a "L" shaped turnaround. Housing prices will not recover for at least 10-15 years.
  5. But what happens if the housing market goes up? Are you going to be forced to buy homes to deliver?
  6. Good luck fool.
  7. 50_luma


    the price of any ultra 2 or 3x etf that is inverse to something that won't go to 0 for example prices of houses, or even US treasury bonds (TBT is example) in the long term will end up very close to 0, its a horrible bet/hedge whatever they call it for a long term speculator
  8. I just read their prospectus. The ETF is a complete scam - there's no market for any market maker to arb their "shares" against the index which they claim to track so this "product" will not track any index and their price will go up and down randomly based on godknowswhat.

    Another quite curious thing: they actually have some other product out there that they claim to track oil prices, which can be arbed quite easily. However those ETFs still trade at 100% something premium/discount which is ridiculous. Someone I read said that their oil ETF's correlation coefficient with oil is something like 0.32 and YHOO "tracks" oil better than their ETF does. That made me suspect that there's no market maker for those shares, which makes sense because they only have 15m in asset and their shares trade like 100 a day.

    They also have a cleverly hidden fixed fee (that's some super small fine print in their prospectus!!) on top of the regular ETF variable charge. $1.2m annually out of the funds, that would be almost 10% in fees for $15m asset which is ridiculous.

    All in all stay away from their home price ETFs - they will not track home price and will frankly not track anything. Some retail money might got sucked in but they will be killed by the 10% fee. The shares will trade, and will probably end up, like GOE, if you know what I'm talking about, but at least GOE did not scam $1.2m out every year in hidden fees.
  9. trom


    Their Up/Down oil shares (UOY/DOY) are not "easily" arbed. I was attempting to do it for awhile. :p

    Even though they claim to only transfer Treasuries and cash between the funds, as a pair they decayed. The volume slowed dried up, as well. Eventually I was left with multiples of the avg. daily volume of each and had to struggle to get out. I haven't looked at them for awhile, but it looks like they've split. I have no interest in them anymore.

    This new housing ETF looks interesting, but I'm a bit skeptical of Macroshares.
  10. What I meant is _theoretically_ their shares should be arbed against CL1 futures, which is easily available and have good liquidity, but they weren't. That's probably because the interest in their ETFs were so low that MMs didn't even bother to arb those. With housing, this is even more impossible because there is no cash/future/whatever market to arb with, so their shares will trade in ridiculous premium or discount. There product design is inherently flawed and is doomed from the start. It's funny how they spin this fatal flaw as "price discovery", LMAO, we don't need a start-up wannabe company with a "product" that trades 100 shares a day w/ huge bid/ask spread to "discover" prices with. The bottom line is they failed to deliver what they promised to (tracking the index!) and they will continue to fail because they have a bad product design. Look for them to exit the business soon.

    The "decay" you mentioned above is because of their hidden fees. They take out $1.2m a year fixed fee out of each pair regardless of the underlying asset on top of the 95bps variable fee. This is hidden in their fine print and they never mention it anywhere else. I was surprised no one has brought any lawsuit against them but again, it's probably because no one is interested in their flawed product.
    #10     May 4, 2009