Double Your Fun...Almost

Same exposure with less money
or
Greater exposure for the same money

What am I talking about?
There’s a new class of ETF available that, with the use of derivatives, allow you to buy, for instance, the Dow 30, but give you almost twice the volatility. I used two words in one sentence that drive many investors screaming from the room. Derivative and volatility.
These are no always all bad. What happens with this ETF is that when the Dow goes up 1%, the Ultra Dow Proshares, symbol DDM, go up about 1.7%. (They advertise that the objective is twice the Dow’s performance, up or down. In reality they get about 1.7 % or so.)
You can leverage your investment and not have to go on margin to do it. Understand, these swords have two edges. Dow up 1%, the DDM will go up 1.7%. Dow down 1%, DDM down 1.7%
What it allows you to do is simple. Let’s say you have 20% of your money in the Dow 30. You have a $100,000 stock portfolio. Instead of $20,000 of the Dow 30 Diamonds, the DIA, you buy $12,000 of the Proshares and you have the same market exposure as you have now. You can put the $8,000 into money market and earn interest without reducing your stock market exposure.
Or
You can increase your market leverage and put the $20,000 into the DDM instead of the Dow 30 and get more market bang for your buck, without putting any more dollars into the market.

There are leveraged ETF’s for the Dow 30, S&P 500, The NASDAQ 100, various Russell indexes, even for various market sectors. (I am not favorably disposed to sector bets, but suit yourself.)

Not surprisingly, you can also go short many of these indexes using ETFs and there are also ultra-short, leveraged, ETF’s. Something for everyone.

You can explore them at www.proshares.com
No, I don’t work for them, no I am not compensated by them, they don’t have a clue who I am.

Be advised, leveraged investing is for grown-ups. I rate these products NC-17