by Mish

Pension Partners reports How to Lose 40% in a Day.

Losing 40% or more in a day was always possible using futures and options, but before June 2006 it was nearly impossible to do so using an exchange-traded fund (ETF). What happened in June 2006? The first leveraged ETFs were introduced.
Fast forward to yesterday and we witnessed the largest one-day decline in history for an ETF: -48.3%. The 3x long Brazil ETF (BRZU) now holds this ignominious distinction.
Thanks to leveraged ETFs, the 1987 crash has become child’s play. For a number of these ETFs, a 20% decline has become a non-event. The 3x long Gold Miners ETF (NUGT), for instance, has had 15 days in which it has declined 20% or more since its inception in late 2010. Its counterpart, the 3x short Gold Miners (DUST) bests this with 16 days with declines of at least 20%.
Before this week, the 3x short Financials ETF (FAZ) had held the record for largest one-day loss, at 45.1% (on March 23, 2009). The record stood for over 8 years. But records, as they say, are made to be broken.
Who will be the first to lose 50% in a single day? The casino is open – place your bets.

One person commented they did not understand the point of my post How High Will Bitcoin Go?

It would have helped if I included the Twitter poll I meant to insert.

Trade of the Century

I was curious where people thought it was headed. So far, 67% think it will more than double from here. Not many readily buyable things go from well well under a penny to $1900.

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As late as June 2012, you could have gotten Bitcoin for $7. I didn’t.

Blockchain Technology

For the record, blockchain technology will become widespread. It is perfect for recording things. Mortgages, deeds, titles, etc, are a perfect fit for starters.

Bitcoin itself is widely used as a capital flight mechanism out of China. Outside of that, it is mostly a speculative plaything.

Why not a triple-leveraged Bitcoin ETF? Perhaps Bitcoin could then eventually take out the above ETF records.

Mike “Mish” Shedlock

Illinois Loses Most Jobs in Nation Following Tax Hikes

Thanks to Illinois governor Pat Quinn and the Illinois legislature Illinois Loses Most Jobs in the Nation

Fearful Investors Losing Faith in Trump?

Mainstream media likes to assign a reason for every squiggle in the stock market, bond market, or commodities. Today provides an amusing example. Reuters says Washington’s Mounting Woes Push S&P to Biggest Loss in Three Months.

Junk Bond ETFs Have Rough Two Weeks: Deals Pulled, Outflows Rise

Volatility has returned, at least in the junk bond market. JNK, the Barclays High Yield Bond ETF, and HYG, the iShares High Yield Bond ETF, both had the steepest decline in three months. Is this another buy the dip opportunity, or is risk avoidance about to take hold?

When Will the Bank of Japan Own 100% of Japanese ETFs?

The Bank of Japan is on a rampage buying everything in sight, from stocks to bonds. It’s on course to becoming the largest shareholder of 55 companies by the end of the year.

Tweets of the Day

Here is a collection of interesting Tweets I gathered this morning a few minutes before a plane flight.

Bank of Japan Owns Over Half of Japanese ETFs; Why Stop There?

In addition to being well on the way of cornering the Japanese bond market, the bank of Japan is even further on its way of cornering the Japanese stock market.

Earth Overshoot: How Sustainable is Population Growth?

For decades people have been predicting overpopulation would wipe out energy resources if not the entire planet.

Lose Lose Lose Affair: Farm Lobby Turns Up Heat on Trump Over NAFTA

If Trump decides to stick it to Mexico in the upcoming NAFTA talks, US farming industry will take a hit. In advance of the talks, the Farm Lobby is Pressuring Trump.

Merkel’s 50% Non-Solution

Hooray! German chancellor Angela Merkel has come up with a solution to the refugee crisis. Unfortunately, simple math proves her alleged solution is half-baked.