Would You Buy This Stock?

Would you buy a stock whose chart looks like the one below?  It had a nice run but has pulled back quite a bit over the last couple of years.

 

The chart above is of the S&P/Case-Shiller 10-City Composite Median Home Price index.  MacroShares has been working on developing an ETF that tracks this index for what seems like years now, and today they finally start trading.  And yes, leverage is involved.  UMM tracks 3 times the 10-City Median Home Price index, while DMM tracks 3 times the inverse of the index.  Whether you want to use these as a hedge for your own home or speculate on the direction of housing, these ETFs now allow you to do it.  But if we get another big housing boom, the leverage on these things could take you on a wild ride.  MacroShares already had one of their inverse oil ETFs go to zero when oil shot up in 2008.  Whatever happens, these new ETFs will be interesting to track.

Comments

[David Merkel]

Stocks are more volatile on a month-to-month basis than that chart. When I first looked at it, I said to myself, "That's not a stock," and guessed that it was a macroeconomic series of some sort, because of implicit or explicit smoothing.

[cheap darkfall gold]

Stocks are more volatile on a month-to-month basis than that chart. When I first looked at it, I said to myself, "That's not a stock," and guessed that it was a macroeconomic series of some sort, because of implicit or explicit smooth

[cheap darkfall gold]

When I first looked at it, I said to myself, "That's not a stock," and guessed that it was a macroeconomic series of some sort, because of implicit or explicit smoothing.