I had bought volatility into market strength to hold for potential economic breakdown or world events that would drive up fear quickly. Of course I chose a leveraged ETF from VelocityShares, the TVIX. It is a very volatile ETF that during the 2008 financial collapse made people a lot of money... I mean a lot.
I had always told myself I'd buy as the economy was strong and save it for a "rainy day." Well who would have known a little novel virus would erase three-years of market gain in a matter of weeks? I didn't. I did follow at least one-rule and that is buy the fear... or in the inverse VIX case, sell the fear as the VIX jumped. Add in a little desire to free up some cash to buy something else and when the vix jumped 20% one-day... I sold. ...around 60 some bucks... Yeah... I'm drinking. No, not really stuff happens
Today's StockTwit snap below shows you that lesson learned. A few days later and the world started to see the impact of the virus it almost became obvious to wait because it was going to be bad.
TVIX is a lifetime high and hit a $1000 today. So, once again folks made a lot of money!!! No, not me on this one...
So, if there is an inverse VIX, are there bullish ETFs that track the positive movement as well as leveraged ETFs that track the same. Of course.
In addition to the Virus pandemic, Russia and Saudi are going at it with oil so energy stocks took a hit as well. Yes, everything else did too but I'm singling out energy because part of my recovery plan is a leverage bull energy stock: Direxion Daily Energy Bull 3X Shares, ERX that has been stripped, whipped and beaten from the mid teens to less than a dollar. Yes, this is a 3x leveraged index of large-cap US energy companies.
I was buying in when it was at fifty-some odd cents today. I'm buying this one because it's fallen so ridiculously and it's holdings aren't worth so much more. Will it recover to where it was? It might not as soon as other things we're looking at but even a bump is going to make you good money here at this discount. It's up almost 70% to over .7. That's the volatile nature of these things. I'm holding this until above $5 though.
There are a few other leveraged ETFs we'll look at to accelerate recovery as well as the cruise-lines an IPO and some other tickers as well in the next few posts.
Happy Trading!
