tag:blogger.com,1999:blog-3190293047729939700.post6144765895430057424..comments2023-11-02T05:09:10.845-04:00Comments on my Value Idea: US dollar: Why is it going upSamihttp://www.blogger.com/profile/17866240785310374236noreply@blogger.comBlogger5125tag:blogger.com,1999:blog-3190293047729939700.post-44353747119019048972008-10-29T13:31:00.000-04:002008-10-29T13:31:00.000-04:00anon,because 200% products will give you twice the...anon,<BR/>because 200% products will give you twice the volatility but not twice the returns in the long run.<BR/><BR/>this is bit technical but a % move to the downside will not be offset by the same % move to the upside. this is what called geometric returns. and having 200% the move can magnify this relationship very quickly.<BR/><BR/>beside your objective is hedge not to gain. <BR/><BR/>if you go with etf you have to hedge dollar for dollar so you need 10000 to invest in an ETF. That why I said in my earlier comment that the opportunity cost can be significant as the 10000 can be put to use in another investment.<BR/><BR/>Another strategy is to buy a call option on an etf this way you need less capital.Samihttps://www.blogger.com/profile/17866240785310374236noreply@blogger.comtag:blogger.com,1999:blog-3190293047729939700.post-21870348113586708432008-10-29T12:32:00.000-04:002008-10-29T12:32:00.000-04:00What particular US dollar short ETF do you favour ...What particular US dollar short ETF do you favour and why not the 200% exposure? Also, for a $10K investment in the US market, what is the dollar amount and percentage point that you would hedge for this particular position? <BR/><BR/>Thanks for sharing your input.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-3190293047729939700.post-65169116137861470492008-10-29T12:11:00.000-04:002008-10-29T12:11:00.000-04:00David,this product is a trading instrument more th...David,<BR/>this product is a trading instrument more than an investment and it requires good timing to execute well. I do not have the skills to pull it off. <BR/><BR/>And due to the 125% relationship with the underlying your returns will fluctuate more than the underlying so even if you make the right call you might not realize any returns on the product. <BR/><BR/>Anon,<BR/><BR/>I do. the best way to hedge is to buy US dollar short ETF with 1 to 1 relationship not the 200% exposure. However the problem with hedging is it cost you in opportunity cost on the funds committed to the ETF.Samihttps://www.blogger.com/profile/17866240785310374236noreply@blogger.comtag:blogger.com,1999:blog-3190293047729939700.post-80998838256816087112008-10-29T11:54:00.000-04:002008-10-29T11:54:00.000-04:00As a Canadian investor, would you recommend hedgin...As a Canadian investor, would you recommend hedging positions recently purchased in the U.S. market given the current exchange rate?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-3190293047729939700.post-50242054837358698262008-10-29T11:40:00.000-04:002008-10-29T11:40:00.000-04:00Have you considered an investment inversely linked...Have you considered an investment inversely linked to interest rates on Treasury bonds to take advantage of this, e.g., RRPIX?DaveinHackensackhttps://www.blogger.com/profile/01313169814904229272noreply@blogger.com