Today’s stock update: near heart-attack moment

December 23, 2008 at 8:20 pm (Money & Investing)

For just under 20 days now (which is a record for me for holding onto one stock purchase) I’ve had stock in a couple of the ProShares UltraShort ETF funds, which in a nutshell are the funds I talked about about a month-ish back that increase in value the worse the market as a whole does. I’ve been holding onto the two funds I own because they’ve been fluctuating back and forth almost daily between being a little positive and being a little negative, completely failing to fall into the patterns they had stayed in for weeks before I decided to go ahead and buy betting on those patterns. However, the bad news still abounds, so these were lined up to still increase in value over the weeks as more and more bad news about the economy comes out.
So I was pretty comfortable, every morning checking my little portfolio to see how much they had gained or lost in value the day before.
To wake up this morning to this:

BAM! Literally overnight, DXD dropped in value over 20%! Holy crap!!

MarketWatch, my usual source for stock market news, had not even a peep to say about what may have happened.
I actually had to ask around, and around afternoon-ish finally got an explaination, and was able to release a sigh of relief – I didn’t just lose a crapload of money overnight after all.

Apparently the fund is required to periodically distribute profits out to the shareholders in a “capital gains distribution,” which is similar to a dividend payment. Difference on my end is that dividends are usually less than a couple of bucks per share – usually much less.
In this case, they’re paying out $16 per share to the shareholders – and then removed that $16 of value from the price of the stock. So I’ll probably have that money back within a couple of weeks at most, and will probably stick it right back into the fund again, which is annoying, but at least I’m no longer in shock.

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