Another Way To Look At FAZ, FAS, SKF, UYG

in other words, leveraged financials ETFs. These two charts are the area charts, plotting the weekly combined price of SKF (double short financial) and UYG (double long financial) for the top chart, and of FAZ (triple short financial) and FAS (triple long financial).



Even ignoring the spikes, SKF+UYG's current price level is less than 1/2 of December 08 level. FAZ+FAS's current price level is less than 1/3 of December 08 level. So, if you are not a day trader, the winning long-term trade for these leveraged ETFs since December 08 would have been to short ALL.

If it's any comfort, unleveraged financial ETF combo hasn't fared that well either. The weekly combined price of SEF (unleveraged financial) and XLF (unleveraged financial) for the same duration shows a decline of about 25%, mostly due to the decrease in SEF.

Unleveraged short ETF Does Not Perform, Either

SEF is Proshare Short Financials, an unleveraged short ETF. Having examined the performance of leveraged (2x, 3x) short and long ETFs, I thought, maybe an unleveraged short ETF would be the way to go when the market turns south again, because it was the leverage that exercebated the volatility decay.

Wrong again. Take a look at the chart below. It compares SEF and XLF (unleveraged Financial Sector SPDR ETF) for the same 6 months. The green line is at 0% change. XLF is back to the same level, an SEF is down almost 40%. If I connect the points where two lines intersect (the black line on the chart), the symmetry does exist on the either side of this declining line.

From the looks of it, even if XLF were to correct 50% from here, SEF would only go up to about November 08 level, at best.