Tuesday, December 16, 2008

Could this be it for interest rates for a long time?

An exciting session ended on the upside today in the American stock markets after the Federal Reserve announced that it is lowering interest rates to the range of 0% to 0.25%. What's next, negative interest rates?

Dow -------- 8,924.14-----+359.61 ----- 4.20%
S&P 500 ------ 913.18 ------ +44.61 ---- 5.14%
Nasdaq -----1,589.89 ----- +81.55----- 5.41%

All of these real estate ETFs rose impressively today:

RWR +13.34% DJ Wilshire REIT ETF. RWR (NYSE ARCA) $40.19 Change:+4.73
ICF +10.66% iShares Cohen & Steers Realty Maj. (ETF) (NYSE) 43.92 +4.23
VNQ +10.21% Vanguard REIT ETF (NYSE) 36.28 +3.36
IYR +12.18% iShares Dow Jones US Real Estate (ETF) (NYSE) 37.58 +4.08

Some Direxion funds are up incredibly since Dec 12, 2008:
1. DXHLX +1600%
2. DXQLX +700%
3. DXDLX +500%
4. DXZLX +500%
5. DXSLX +450%

The first, at least, is rumored to be a "reverse split". These Direxion funds aren't "buy and hold" funds. There is a "buyer beware" article from Morningstar warning against these funds here:

But with all these spectacular gains today, investors begin to make up for previous cliff-drops.

In a comment dated Thursday, December 25, 2008 1:53:00 PM EST, here is what a commenter adds about Direxion Funds, with my gratitude:

Anonymous said...

Please be aware that eight (8) Direxion Funds will be undergoing a reverse split the weekend of December 12, 2008. The ratios are shown below.

December 12, 2008, will be the last date of the pre-“reverse split” price and December 15, 2008, will be the first day reporting the post-“reverse split” price. Share balances will be adjusted downward at the same ratio the NAV
is increased.

Here is the table of ratios:
Small Cap Bull 2.5x Fund DXRLX 254939838 1:2
Developed Markets Bull 2x Fund DXDLX 254939614 1:5
Emerging Markets Bull 2x Fund DXELX 254939630 1:5
S&P 500 Bull 2.5x Fund DXSLX 254939705 1:5
NASDAQ-100 Bull 2.5x Fund DXQLX 254939200 1:7
Latin America Bull 2x Fund DXZLX 254939507 1:5
China Bull 2x Fund DXHLX 254939515 1:12
Commodity Bull 2x Fund DXCLX 254939655 1:3

*The ratio of 1:x means that you will get 1 (one) post-“reverse split” share for x pre-“reverse split” shares. The NAV will go up by the same ratio.

At the close of business on December 12, 2008, you own 15,000.000 shares of the Direxion Latin America Bull 2x Fund at an NAV of $4.30 per share. Your
account’s total Net Asset Value is $64,500.00.

At the open of business on December 15, 2008, you will own 3,000.000
shares of the same fund at an NAV of $21.50 per share. Your account’s total Net Asset Value will be $64,500.00.

If you have any questions, please contact us at 800-851-0511 between the hours of 9 AM and 6 PM Eastern Time, Monday through Friday.

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