Abstractdynamics.org Website Review

There is a crack epidemic on the stock market. It trades by a variety of street names, FAZ, FAS, SRS, TZA & QID being just a few. Like crack cocaine these vehicles promise fast and stunning highs, one small hit can take you to the top. Occasionally they even succeed, but like crack cocaine these vehicles are doomed to collapse, each successive hit providing ever diminishing returns, lower lows that an addict replicate the effects of shorting various industries and trading with high amounts of leverage like the big boys do. ETFs are a very new concept to finance, they are basically mutual fund like entities that trade on the stock market, making them more liquid and more accessible to investors than mutual funds. Theyve been around for about two decades, but its only in the last few years that they have really taken off in big numbers, with innovative short (aka bear) and 2x or 3x leveraged ETFs popping up left and right. Take a look at a chart on the bottom to get a sense how interesting in these things has exploded. In 2008 leveraged bear etfs like FAZ were tickets to riches, as the stock market crashed they erupted in value, possibly making a few clever operators insanely rich. But that initial success quickly turned na*ty. These ETFs are all flawed to the core, they are designed in a way that they decay over time, their values fluctuate up in down, but the overall tend is mathematically almost guaranteed to be down. The easiest way to see this flaw is the look at chart of a leveraged Bull and Bear pair over time. FAZ is a 3x Bear, it is designed to go up when financial industry stocks go down, and to return 3 times more than the value that those stocks go down. FAS is the 3x Bull counterpart, it is designed to go up when the financials go up, and to go up 3 times faster on a daily basis. One would logically expect these two ETFs to cancel each other out, one goes up 3x when the other goes down 3x, so over time the net result should be zero. Yet if one looks at chart of these two mapped out over the past 6 months