Why gamble on stocks when we have SSO???

Discussion in 'Stocks' started by short&naked, Sep 25, 2008.

  1. Now that there is an ETF that tracks the SP500 (the strongest trending issue out there) with 2x leverage within the instrument, I don't understand why anybody would gamble on stocks that are potentially marred by rumors and the possibility of one losing the entire investment. Also, one is always usually last to know in this business anyway.

    Just look at AIG. A lot of money was lost in this stock, however, holders of the DOW 30 were unscathed, as AIG was simply replaced with Kraft.

    Ok, if you are able to find stock that beat the general market during a downturn, fine. Perhaps it is even possible to find that 50 bagger (although it is my contention that the "Peter Lynch approach" is much too antiquated)

    You can never lose all of your money holding an index.

  2. Also difficult to outperform an index that way :)
  3. don't forget SDS...very fast moves.

  4. CBuster


    "2x leverage". "Can't lose all your money". lol
  5. What do you mean?
  6. It tracks the index in lock step. with a 10% slide in the S&P, the loss on SSO will be the 10% plus the corresponding effect of the "ultra" movement.
  7. blnbr


    Don't forget SSO moves 2X the SP500 index % move in BOTH up and down directions.

    You may use SSO to your advantage when the market moves up. But when the market moves down, you would lose double in terms of % as well. SSO is a two-edged sword, be careful when you use it!
  8. Leverege is your choice. The broker or exchange only requires a certain margin. If you want no leverge just keep the remainder in a seperate account or under your mattress.
    Just remember you are always 100% in. Your risk is the margin you gave the broker plus the what you have in your bank account. In theory there is no leverage when you define an investment by risk.

    Also ,I beleive the SSO and ETF will get better tax treatment.
  9. Traber


    I don't understand why trade stocks either. Just stick to futures, focus on one instrument plus 60/40 tax break. I'm still very new at this but I don't understand why one would prefer trading stocks over other trading vehicles out there.
  10. This is why I say all the time.

    Indexes provide instant diversification.
    Besides the SSO tracks the DAILY % move of the S&P, so you never can owe money to the broker (even if it goes down more than 50%).
    #10     Sep 25, 2008