DCR

[Supreona]

I think of myself as a forward thinking investor. Although I do think Oil will reach 145-150 per barrel. Eventually it will come down, not any time soon, but eventually it will.

And when the bubble does burst, would buying DCR be a good move?, and in your guys opinions, what would indicate that the bubble is ready to burst. Not something like today, which is simply a bout of industry wide profit taking leading into the holiday weekend and nothing more. Rome wasn't built in a day and it would be ludicrous to think oil would peak in a day and retreat steadily, with an inventory that is diminishing consistently coupled with an increasing demand.

Keep an eye on those Energy Micros on the Amex.

[Supreona]

...still no takers?

[madcowdisease]

...still no takers?

I replied to your post in the Under $2 forum

[Supreona]

...maybe thierry will move it. I didn't put it in the penny stock section because its not a penny (stock) even though its under $2. Anywayz its cool either way.

Good pick no matter where it is.

[madcowdisease]

There went any unrealized gains I had. Tough to predict a $16 move in two days when the second day's move of $11 was unprecedented. Live and learn I guess. I did have some calls in the oil sector that more than made up for the spanking I took today in this one.

I'll look to average down as oil approaches $150.

[DDuffeeInc]

I consider myself a tad of a gambler. At the bell Friday I bought some DCR at .92. I will be watching it close Monday morning. If I lose a little then that will be ok. I know there will be an upside soon as I believe the markets cannot keep oil at $150. It will have to eventually go back down at least after the summer. When it does I can see DCR being a two bagger at least from this price. Let's say oil does go up to $200. How low can DCR actually go from .92? Maybe to .40? If it does then would it be wise to load up even from there or could DCR actually go to .0?

Actually I am still a part time novice investor. I catch myself making alot of basic panicky mistakes. I am hoping that time will be on my side to help season me out to be a savvy investor.

[Supreona]

I would say sit back and sip your iced tea(in the words of Guru) until oil hits $150. You need to be in line with the commodities guys and see how far they're willing to let it go before they sell off. If you get caught buying during that sell off, u will surely be buttraped.

[statepkt]

Any ideas on UCR? The fund appears to be capped at $40 right? Right its trading at 39.14, so there is still some room for growth, since oil still appears to be heading higher?

Also the termination date is June 25th, does that mean all stock holders will just get $40 even if oil is 150?

[Supreona]

Buying DCR Friday + Todays decline = Severe Buttraping.

I had fantasized about buying it against oil, thinking it would correct itself...then Aiki slapped me and I woke up.

[statepkt]

Didn't oil prices fall today?

[aiki14]

Didn't oil prices fall today?

What you are seeing is institutions bailing on the fund, I can't remember ever seeing it this bad against the trend. This could break the fund. Amazing stuff. Down 87.5% since 1 may.

[madcowdisease]

What you are seeing is institutions bailing on the fund, I can't remember ever seeing it this bad against the trend. This could break the fund. Amazing stuff. Down 87.5% since 1 may.

One would think at such low price levels this thing would be like a coiled spring ready to pop on any news oil is headed lower.

[madcowdisease]

DUG down big today too despite oil's retreat.

[Horsefish]

What you are seeing is institutions bailing on the fund, I can't remember ever seeing it this bad against the trend. This could break the fund. Amazing stuff. Down 87.5% since 1 may.

Stumbled across some info that I missed completely when I bought this ETF. Aparently DCR and UCR are "paired" etfs. They were supposed to end in 2028. Due to the unexpected spike in oil, an early disolution date has been triggered. DCR will become almost worthless if oil stays above 120 by June 25. I admit, I do not truly understand the calculations. Links to article, prospectus and sec fhttp://biz.yahoo.com/pz/080529/143721.htmlilings:....

May want to lighten up or bail here. Risk just went through the roof.

[madcowdisease]

Stumbled across some info that I missed completely when I bought this ETF. Aparently DCR and UCR are "paired" etfs. They were supposed to end in 2028. Due to the unexpected spike in oil, an early disolution date has been triggered. DCR will become almost worthless if oil stays above 120 by June 25. I admit, I do not truly understand the calculations. Links to article, prospectus and sec fhttp://biz.yahoo.com/pz/080529/143721.htmlilings:....

May want to lighten up or bail here. Risk just went through the roof.

I don't quite understand that article. It sounded to me like if DCR is terminated there would still be some sort of a payout. Did I read this incorrectly?

http://seekingalpha.com/article/79501-a-speculative-way-to-play-the-oil-bubble?source=yahoo

[DDuffeeInc]

First of all I am a novice investor at best. I am still very new and make simple basic mistakes and it costs me money. I think my worst habit is being impatient.

When oil went up last Friday, I absolutley knew it was going back down on Monday, which it did. I bought 15,000 shares of DCR at .93 on Friday right before the market closed. I knew I was up for profits on Monday without a doubt. Well, DCR did go up Monday for about 4 minutes to .98. Then I watched it go down, and down and down. I broke a basic rule of not losing over 10% on a trade. I actually did sell 5000 shares at .74 and the rest at .73. That was painful to say the least. Then part of me was glad I turned loose of it when I did. It went on down to .45. So for some reason the downturn of oil did not apply to the short. I thought surely when it went down even just a tad it would mean a uptick in the short, I guess that shows my inexperience there.

Now I see that it went from .42 to .67 today on about a $3 loss in oil. It was a top gainer but really I don't care. Now I see the risk was way out there for not really that much. I was actually up on my portfolio until yesterday, now I am down a little bit but not a large amount.

Tonight I see on Kudlow where they expect the bubble to pop and oil to go down to $75 a barrel. If this does happen will DCR still be in play or does it get delisted no matter what on June 20th? If it is still around how will you guys see it? It looks like Supreona was right when he told me to sit back and sip tea. After reading that I knew I should have sold first thing Monday, but my inexperience showed and I got tanked for a little.

What is some of the more experienced guys take on DCR and oil in general? If oil does go down, and it will go down someday, what would the best route be for a downturn?

Also on a side not, getting into the market so far has been a blast for me. At a time when I was bored stiff from owning a business for 15 years it has given me drive towards a hobby of sorts. My true goal to beat out a CD which at todays rates will be easy I hope. Wish me luck !!

Thanks guys for letting me rant. DD

[Horsefish]

As I see it, in a nutshell, the two funds swap assets back and forth. The point at which DCR has 0 value is where oil is at $120.00. On the 25th the funds will be liquidated. One person on another forum put it like this:

Now, HOW MUCH, if anything, you will get paid if you are holding DCR on June 25th is really based on a formula. You will get :

X = (120 - price of crude) / 3

If crude is at $120 or above at that time, you will get ZERO.

But for any price below $120, you will get something. If crude was at $105 for example, you would get (120 - 105)/3 = $5.

Going by that formula, and given a finite timeline to termination, DCR is more like an out-of-money option right now. In order to justify the current price of $0.50, oil should be around $118.50, but oil is way above that right now.


If that formula is correct, DCR is pretty risky at this point. Good luck.

[Supreona]

First of all I am a novice investor at best. I am still very new and make simple basic mistakes and it costs me money. I think my worst habit is being impatient.

When oil went up last Friday, I absolutley knew it was going back down on Monday, which it did. I bought 15,000 shares of DCR at .93 on Friday right before the market closed. I knew I was up for profits on Monday without a doubt. Well, DCR did go up Monday for about 4 minutes to .98. Then I watched it go down, and down and down. I broke a basic rule of not losing over 10% on a trade. I actually did sell 5000 shares at .74 and the rest at .73. That was painful to say the least. Then part of me was glad I turned loose of it when I did. It went on down to .45. So for some reason the downturn of oil did not apply to the short. I thought surely when it went down even just a tad it would mean a uptick in the short, I guess that shows my inexperience there.

Now I see that it went from .42 to .67 today on about a $3 loss in oil. It was a top gainer but really I don't care. Now I see the risk was way out there for not really that much. I was actually up on my portfolio until yesterday, now I am down a little bit but not a large amount.

Tonight I see on Kudlow where they expect the bubble to pop and oil to go down to $75 a barrel. If this does happen will DCR still be in play or does it get delisted no matter what on June 20th? If it is still around how will you guys see it? It looks like Supreona was right when he told me to sit back and sip tea. After reading that I knew I should have sold first thing Monday, but my inexperience showed and I got tanked for a little.

What is some of the more experienced guys take on DCR and oil in general? If oil does go down, and it will go down someday, what would the best route be for a downturn?

Also on a side not, getting into the market so far has been a blast for me. At a time when I was bored stiff from owning a business for 15 years it has given me drive towards a hobby of sorts. My true goal to beat out a CD which at todays rates will be easy I hope. Wish me luck !!

Thanks guys for letting me rant. DD

I would just say leave it alone altogether...fool me once...fool me twice...u know how it goes. Don't chase DCR when theres plenty of better plays out there. I would move away from oil entirely for the time being, I mean you could play FPP,PDO and MXC in and out, but you better be efficient with your timing or more buttraping will ensue.

But like I said...its hard to time with oil moving freakishly on the slightest speculation.

[madcowdisease]

As I see it, in a nutshell, the two funds swap assets back and forth. The point at which DCR has 0 value is where oil is at $120.00. On the 25th the funds will be liquidated. One person on another forum put it like this:

Now, HOW MUCH, if anything, you will get paid if you are holding DCR on June 25th is really based on a formula. You will get :

X = (120 - price of crude) / 3

If crude is at $120 or above at that time, you will get ZERO.

But for any price below $120, you will get something. If crude was at $105 for example, you would get (120 - 105)/3 = $5.

Going by that formula, and given a finite timeline to termination, DCR is more like an out-of-money option right now. In order to justify the current price of $0.50, oil should be around $118.50, but oil is way above that right now.


If that formula is correct, DCR is pretty risky at this point. Good luck.

If that is the case I got my arse handed to me on this one. I'll keep my fingers crossed for a pullback in crude to regain some of my losses but I was not aware this thing would be liquidated. Who would of thought a fund would be wiped out? Lesson learned I guess.

[Gordo]

First of all I am a novice investor at best. I am still very new and make simple basic mistakes and it costs me money. I think my worst habit is being impatient.

When oil went up last Friday, I absolutley knew it was going back down on Monday, which it did. I bought 15,000 shares of DCR at .93 on Friday right before the market closed. I knew I was up for profits on Monday without a doubt. Well, DCR did go up Monday for about 4 minutes to .98. Then I watched it go down, and down and down. I broke a basic rule of not losing over 10% on a trade. I actually did sell 5000 shares at .74 and the rest at .73. That was painful to say the least. Then part of me was glad I turned loose of it when I did. It went on down to .45. So for some reason the downturn of oil did not apply to the short. I thought surely when it went down even just a tad it would mean a uptick in the short, I guess that shows my inexperience there.

Now I see that it went from .42 to .67 today on about a $3 loss in oil. It was a top gainer but really I don't care. Now I see the risk was way out there for not really that much. I was actually up on my portfolio until yesterday, now I am down a little bit but not a large amount.

Tonight I see on Kudlow where they expect the bubble to pop and oil to go down to $75 a barrel. If this does happen will DCR still be in play or does it get delisted no matter what on June 20th? If it is still around how will you guys see it? It looks like Supreona was right when he told me to sit back and sip tea. After reading that I knew I should have sold first thing Monday, but my inexperience showed and I got tanked for a little.

What is some of the more experienced guys take on DCR and oil in general? If oil does go down, and it will go down someday, what would the best route be for a downturn?

Also on a side not, getting into the market so far has been a blast for me. At a time when I was bored stiff from owning a business for 15 years it has given me drive towards a hobby of sorts. My true goal to beat out a CD which at todays rates will be easy I hope. Wish me luck !!

Thanks guys for letting me rant. DD

Sorry about your loss. Thanks for the insight even though it was a tough lesson.

[DDuffeeInc]

Yes, I am down but not out. I am in the market with about 30% of my portfolio in stocks at current. The rest is cash waiting for buying opportunities. I see the market correcting and I am licking my chops at the opportunities coming up. It should be a great way to move up. I am still kicking myself for not getting in back in Jan when I could have rode the first wave of the year up and got a little ahead. It seems to me every time I stray away from the basics it comes back to bite me. One thing is for sure though, I am sure having alot of fun :top: doing this. What a challenge !!

[Horsefish]

I finally found that article again. Wonder why we haven't heard more? The "down" fund is DCR and the "up" fund is UCR. They trade as a paired set.



Yale finance professor Robert Shiller is a co-founder of MacroMarkets, and designed the sophisticated oil products. The MacroShares, which trade on the American Stock Exchange, were marketed as a unique structure that provides indexed exposure to certain markets without holding the physical assets. The funds have expense ratios of 1.6%, but income from the Treasurys can offset those fees.

When the initial up and down pairs were created, the corresponding shares were each priced at $60, which was close to where the Nymex oil futures contract was trading at the time. If oil prices rose to $120, the "down" shares would run out of assets to pledge to its "up" sibling.

Therefore, if the shares move 85% away from their initial prices in either direction, a termination is triggered. The shares would then distribute all assets back to shareholders at the end of the quarter in the form of cash.

Due to oil's surge, that's exactly what's set to happen.

Last week, MacroShares issued a press release saying the trigger "fired" when the Nymex crude oil contract for June, the reference price for the MacroShares, closed above $111 for three straight days.

The MacroShares' last day of trading will be June 25, the company said. On July 3, a final distribution payment will be made to shareholders of both funds of record as of June 30, based on their NAV, which will be calculated on the June 25 closing prices of the Nymex light sweet crude oil futures contract for August. Of course, the move could trigger unwanted capital-gains taxes for investors.

If oil prices top $120 between now and June 25, the "down" fund can only go to zero -- it can't have a negative value, so gains in the "up" shares are capped to a certain degree.

The MacroShares securities have more than $300 million in assets and trade in excess of three million shares a day, "which clearly demonstrate the market's acceptance and willingness to trade the product," said Sam Masucci, chief executive of MacroMarkets. Not surprisingly, most of the assets are in the "up" oil fund, which held nearly $255 million late last week, according to the Amex.

The Madison, N.J.-based firm recently filed a prospectus to offer a new MacroShares oil product based on a benchmark crude oil price of $100, the CEO said.

The MacroShares last year announced a three-for-one stock split designed to make the shares cheaper and more accessible to investors as crude oil prices rose, and to increase liquidity.

[wallstreetsedge]

Yes, I am down but not out. I am in the market with about 30% of my portfolio in stocks at current. The rest is cash waiting for buying opportunities. I see the market correcting and I am licking my chops at the opportunities coming up. It should be a great way to move up. I am still kicking myself for not getting in back in Jan when I could have rode the first wave of the year up and got a little ahead. It seems to me every time I stray away from the basics it comes back to bite me. One thing is for sure though, I am sure having alot of fun :top: doing this. What a challenge !!

good to see youre managing everything well. a big mistake that a lot of people make is to jump head first into something with all of their capital and end up having no cash to use on other opportunities