1. Your Questions About Etfs Explained
Robert asks…
whats the differerence between DIG and DUG ETFs. Why dont they
act in Tande?
Arent they supposed to reflect US dowjones Oil Index. But it looks like they both have an
inverse relation ship. Can someone please explain this
gotcha, nice, thank you
Steve Winston answers:
DIG is an ETF which "seeks daily investment results, before fees and expenses, which
correspond to twice the daily performance of the Dow Jones U.S. Oil & Gas index."
DUG is an ETF which "seeks daily investment results, before fees and expenses, which
correspond to twice the INVERSE of the daily performance of the Dow Jones U.S. Oil & Gas
index." (Emphasis added.)
If both investments do what the are designed to do, they will be exact opposites of each other. It
is similar to a situation where I buy a stock to establish a long position of 100 shares of the
stock and you sell 100 shares to establish a short position of 100 shares of the same stock.
Every time the stock moves up I will make money and you will lose the same amount of money.
Every time the stock moves down you will make money and I will lose the same amount of
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2. money.
Carol asks…
Why do so many insurance salesman call themselves finacial
planners when they are anything but?
Nothing bothers me quite like insurance salesman that call themselves "financial planners".
They would rather sell someone whole life insurance than explain to them how a Roth IRA with
ETFs works. I wonder if they are just ignorant or if they actually understand that they are
insurance salesman and they have no clue about retirement planning.
Steve Winston answers:
Because if they called themselves Insurance Salesmen, people would run a mile without
listening to them.
Actually, they really are financial advisers/planners as they can assist you in how best to invest
your money as well as working out a portfolio for you.
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3. George asks…
What are good resources to learn about portfolio construction?
I have mutual fund and index fund investments but would like to try creating my own portfolio.
What are some good resources that explain how to create a diversified portfolio and how to
rebalance and decide when to buy/sell new securities? I'd like to incorportate ETFs in the
portfolio
Steve Winston answers:
One resource that I use is "All About Asset Allocation" Richard Ferri. But if you are going to
invest in individual companies, you also need references on how to pick individual companies. A
couple of books on the subject are "The Intelligent Investor" Benjamin Graham and "Sensible
Stock Investing" David Van Knapp. The 2nd is a cook book approach to picking stocks.
Although I do not completely agree with the methodology the concept is nevertheless a good
beginning.
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4. William asks…
Whats a good book to understand intermediate Finance?
I have been following the credit crisis closely but does anyone know of a good book to explain
the terms and principles of finance.
Things like ETFs bonds CDS Treasury bills prefernce shares, these sort of terms?
Steve Winston answers:
I dunno.
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5. Thomas asks…
What is a good book that will teach me all about investment
vehicles?
I'm in HS and want to learn ALL about hedge funds, trusts, ETFs, securities, the stock market
and much more.
What's a good book that will explain all of this to me? I would prefer simple and easy terms for a
beginner. THANKS! I'm excited.
Steve Winston answers:
Investors Chronicle, "beginners guide to investment" see http://www.shareworld.co.uk
Beginners corner
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