I was happy with my content in my last post here (early March) ... https://hotcopper.com.au/posts/43346485/single ... that is, showing confidence in using both BBOZ and GEAR as useful leveraged ETF tools to take advantage of rises and falls in the XJO. To elaborate, I was generally confident, when switching out of one into the other, mostly at the same XJO price, in order to receive the "claimed" 2-2.2% rises in each of them. Sure, there were always periods when those "returns"went out of wack but generally over time balance was restored.
However, since this Covid thingy, especially since the XJO bottom on March 23rd, the anomalies have been exaggerated and, frankly, very disappointing. No longer are we seeing the correct correlation from either BBOZ and GEAR to the XJO(i.e. the expected 2 - 2.2% rise as the XJO falls or rises). This can be clearly represented in this simple percentage retracement comparison chart for all 3. Based on the XJO retracing(so far) 52.5%(close basis) from the Mar. 23rd low, one would expect almost similar % rises/falls in both GEAR and BBOZ. BUT, no ... GEAR's value has risen only 38.2% and BBOZ has fallen a whopping 92.5%(almost back to the XJO ATH level in Feb.). How could that be?
So my strategy of switching from one to the other has failed miserably, and cost me money. Sure, part of that I have to accept(in hindsight) was poor switching entry levels,, my own market direction views and a bit of lack of Money Management BUT mostly because of the current failure of both Funds to fulfill their 'promised' 2-2.25% gains against the mother instrument, the XJO, that it is measured too!
