Comments on: Reverse Splits: Why Leveraged ETFs All Go to Zero

By: ETF Base

ETF Base — Wed, 02 Mar 2011 00:52:32 +0000

A reverse split has no net impact on total holdings. It just raises the share price and decreases the shares you’re holding in an inverse fashion, so $1000 before split is still worth $1000 after. The reason I pointed it out for leveraged ETFs is that it further illustrates how they’re doomed to fail over time since they constantly have to undergo reverse splits just to maintain a reasonable share price – or else they’d be trading at sub-$1.

Vanguard is great for their low fees and ethical business practices.

By: mh

mh — Tue, 01 Mar 2011 22:25:55 +0000

Hi fellas, I had a quick question.

I am fairly inexperienced in the financial world. I’ve read about Buy and Hold and chose to tie up some of my retirement in some Vanguard ETFs. This concept of Reverse Splits is completely foreign to me. I understand the concept as you explained it, but I don’t see how the value is affected if share prices increase… is that only in the case of a Leveraged ETFs?

I bought a few Vanguard ETFs because their expense ratio is half of what the equivalent mutual fund goes for.

I would just like to know if my investments are subject to the Reverse Splits that you mentioned? Does the fact I am Not leveraging give me any breaks?

Obviously the expense ratio is irrelevant if I would lose more money on an ETF using the same stocks at the Mutual fund…

Any help would be appreciated.

By: ETF Base

ETF Base — Fri, 31 Dec 2010 00:59:30 +0000

Congrats; the pivot bottom in equities and commodities was March. Try taking a look at any timeframe prior. It’s abysmal. Assuming you’ll enter at pivot bottom with no corrections for any asset class is quite dangerous-the odds are infintessimally small.

By: jake gold

jake gold — Fri, 31 Dec 2010 00:26:52 +0000

I bought and hold Ultra Basic Materials in April 2009. My return to date is 287%. You can achieve long term returns in a leveraged ETF in a directional market.

By: Scott

Scott — Thu, 16 Sep 2010 10:17:42 +0000

Thanks for the informative article. I am currently working on a speculative trading strategy that only trades 3x Leveraged ETFs for smaller account appreciation.
One good point is that because the fund owners want to keep making money, they will continue to do reverse splits.

thanks,
Global 34

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By: Planning and Personal Investment Articles | Personal Investment Management and Financial Planning Blog Directory

Fri, 25 Jun 2010 01:11:29 +0000

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