Boy, could I write a long post about my relationship with a dastardly ETF called NUGT.
I am not quite sure how I first came across this triple-leveraged gold miner ETF offered by Direxion Funds, but I certainly did.
I know that it was a few years ago at this point but do not feel up to accessing my E-Trade account to dig into the exact details.
What I do recall is purchasing a hundred shares as the fund was shooting up, writing a covered call on my shares for about $400 or so, and then having the shares called away on the third Friday of a month for nearly $600 more than I paid for them, netting me nearly a grand in profit in less than three weeks.
I remember the feeling well because I took a Friday off from work and surprised my daughter by picking her up from school with my little baby, our Morkie. I remember the great feeling that I had hanging out on the playground with my daughter, her friends and my little baby on a lovely spring afternoon while thinking about the six grand that I had rapidly turned into seven and feeling like I had a secret way of making money that nobody else knew about, not even my wife.
Like a gambler who won big on a slot machine, I returned to the slot machine shortly thereafter and made another gamble investment into this highly volatile ETF. I hesitate to call it a stock because a stock typically has an underlying company that it invests in or a group of companies that actually make and sell things.
NUGT is a 3-times leveraged exchange-traded fund that should be used for short-term trades only, even by Direxion's own presenting of it.
Per Investopedia, the fund attempts to track inverse the performance of the NYSE Arca Gold Miners index via futures contracts, short positions, reverse purchase agreements, options, swap agreements and other derivatives of derivatives.
In short, before Bitcoin and other cryptocurrencies came along, NUGT might have been one of the most highly volatile funds that one could invest in. I would not put a penny in it that my children's college accounts or my retirement would depend on.
Skipping over the details of a few years of buying and selling this thing, I sold off a hundred shares via another call option in 2016, resulting in a nearly eight thousand dollar gain that had me cutting a check for nearly two grand to the IRS last spring instead of collecting a return from them.
The ETF was so volatile that a few years ago, my thousand-plus shares (I kept buying more shares like an addict and I always prefer nice round numbers) would often appreciate or depreciate by five thousand dollars or more in a single day.
I recall telling a Millennial who I have worked with for a few years now that my shares in this fund went up by over six thousand in value in one stinking day! I was up nearly eighteen thousand on my shares at that time in just one account. I also was up another five grand or so in my E-Trade account.
Well, you know the old adage...hindsight is 20/20.
The Millennial, who had just purchased a few hundred dollars worth of stocks via an app called Robin Hood was amazed and thought me a big-time trader. Not at all, I told him. My brother worked for two trading firms where he dealt in millions per day in very complex trades prior to becoming a lawyer.
I am not going to go into those details, like the calendar-based futures spreads that he worked in or pitting one foreign exchange versus another at 3:00 a.m. our time. He could write about that someday if he wishes. He would often make more or lose more in a week that I earned in an entire year, and he is seven years younger than I am.
No, I must admit that I suffered from greed at that point, although it did not feel like greed at the time.
What it felt like was that maybe I should sell my shares when I am up twenty-five grand. Maybe up fifty. Maybe a hundred. I would fall asleep sometimes wondering if my shares of NUGT would go high enough that I could pay off my $140,000 mortgage debt with it at some point. Of course, I wanted it to go higher than that, since the capital gains tax would be monumental were I to use all the gains to pay off our home.
Did that actually happen?
HELL NO!
Even before Trump was elected in fall of 2016, the stock market began its steady rise and the dollar became stronger. Not that NUGT exactly follows the price of gold, but it mirrors it enough that the leveraged nature of the gold miner company stocks fall rapidly with every small movement of gold becoming weaker against the dollar.
When you can make big money investing in almost any stock, why purchase something that does not produce anything tangible, nothing that you can eat or use as energy, and something that does not pay a dividend?
Well, to make a long story short, I have held this dog for the past two years since it has fallen from the equivalent of $143 per share down to the mid-twenties.
Check out the last four years of this thing per my stock and investing Bible, Yahoo! Finance:
If you have no interest in stocks whatsoever, I apologize for making you look at the chart.
But for those of you who put some money out there into the market, you can see that my shares were worth over $400 per share in summer of 2014, nearly four years ago. You can also see how those same shares plummeted to the twenties by the following July.
One thing about this ETF and the Money Mensch. I bought and sold shares before this chart even starts four years ago, I owned shares as they reached great heights in summer of 2014, and I own shares of it as I write this.
As a matter of fact, I put in an order for more shares last night after posting about the great advice that Coach Holtz gave me.
I wonder what he would say about a middle-aged, middle class father of two with a mountain of bills to pay holding onto a stock when he was up over twenty grand to the point that he is down nearly ten grand on those same shares.
Anyway, I put in an order for twenty-five more shares last night because the number of shares in my Capital One account were diminished to a crooked number, 175, following one hundred shares being called away in 2016 and the reverse split last May as the share price plummeted.
Rather than thinking about the risk of my trade order, I helped my daughter who was hosting a sleepover last night with other girls from her poms squad. I read until late, and then I fell asleep hoping that I would make some money while I slept via ads on this page.
I did not.
What did happen was that the trade was executed first thing in the morning, and the confirmation landed in my inbox when I checked my Yahoo! mail mid-morning.
You can see that I placed a limit order of $23.40 per share and paid $6.95 in commission, for a total of $589.45. Thus, I now hold two hundred shares in my Capital One trading account, and I do not wish to share how many shares I have in my original trading account with E-Trade. Like I wrote, I am down a lot on it.
But I do not share this information for sympathy, or for someone to try to hack into these accounts.
I write it because I believe that gold is due for an upswing.
I'm not sure why, because I always think this.
Not to the point of those nutty Gold Bugs, who think that all currencies are fiat and that only gold holds true value when the shit hits the fan.
If you want to read some way out theories, read long online debates about the merits of buying real or virtual gold, how and where to store it and the like.
You will read about people who store physical gold in other countries. You read people who claim that their guns and shelters will be more valuable than a useless metal that nobody accepts. You will read about people whose entire fortunes are held in gold coins hidden in the ground. You'll read a lot of bat shit crazy stuff.
Me, I like to invest in gold via this ETF.
I started by making a quick grand on it. That was probably not a great thing, since it got me hooked on this thing.
I bought more and more until I was up over twenty grand on it.
I sold a hundred shares via a covered call in 2016, collecting nearly a grand on selling the call itself and another six or so grand on the increased share price.
I held onto this dog as it plummeted like a falling rock from over four hundred per share to the twenties, considering reverse splits.
I hold hundreds of shares including twenty-five more purchased today.
I put in writing here, as the boxer Roberto Duran said in the famous fight with Sugar Ray Leonard: "No mas!"
I also share this with you so, someday, when I write a post about how I made ten or twenty grand on a stock, I can link back to this and add some more details on my thinking about this and I can look back on more of the trades that I have made in this fund that I both love and hate.
I have loved it in the past (when I made money on it), but hate it today.
I also hereby recognize the distinct possibility that it will continue declining in value over the coming months and years and that nobody should view this thing as a long-term investment, like it has become for me.
So am I a Gold Bug?
Not really. I would typically prefer investing in blue chip companies like Coca Cola, McDonald's, Apple and Google.
I invest in Vanguard's Wellington fund and Primecap fund with money that I want and need to grow steadily over the years.
My own IRA is split between two T. Rowe Price funds, both of which I will be sending money to by Paying Myself First on the first of the month, the Blue Chip Growth fund and the Capital Appreciation fund. I have invested my wife's entire IRA with the Vanguard S&P 500 fund.
No, don't call me a Goldbug.
As I thought of a snappy, SEO-friendly name for what I am, and considering that I am a Jewish mensch who is trying to do whatever I can to support my family, I feel more like a Goldberg, Goldstein or Goldman.
I am not quite sure how I first came across this triple-leveraged gold miner ETF offered by Direxion Funds, but I certainly did.
I know that it was a few years ago at this point but do not feel up to accessing my E-Trade account to dig into the exact details.
What I do recall is purchasing a hundred shares as the fund was shooting up, writing a covered call on my shares for about $400 or so, and then having the shares called away on the third Friday of a month for nearly $600 more than I paid for them, netting me nearly a grand in profit in less than three weeks.
I remember the feeling well because I took a Friday off from work and surprised my daughter by picking her up from school with my little baby, our Morkie. I remember the great feeling that I had hanging out on the playground with my daughter, her friends and my little baby on a lovely spring afternoon while thinking about the six grand that I had rapidly turned into seven and feeling like I had a secret way of making money that nobody else knew about, not even my wife.
Like a gambler who won big on a slot machine, I returned to the slot machine shortly thereafter and made another gamble investment into this highly volatile ETF. I hesitate to call it a stock because a stock typically has an underlying company that it invests in or a group of companies that actually make and sell things.
NUGT is a 3-times leveraged exchange-traded fund that should be used for short-term trades only, even by Direxion's own presenting of it.
Per Investopedia, the fund attempts to track inverse the performance of the NYSE Arca Gold Miners index via futures contracts, short positions, reverse purchase agreements, options, swap agreements and other derivatives of derivatives.
In short, before Bitcoin and other cryptocurrencies came along, NUGT might have been one of the most highly volatile funds that one could invest in. I would not put a penny in it that my children's college accounts or my retirement would depend on.
Skipping over the details of a few years of buying and selling this thing, I sold off a hundred shares via another call option in 2016, resulting in a nearly eight thousand dollar gain that had me cutting a check for nearly two grand to the IRS last spring instead of collecting a return from them.
The ETF was so volatile that a few years ago, my thousand-plus shares (I kept buying more shares like an addict and I always prefer nice round numbers) would often appreciate or depreciate by five thousand dollars or more in a single day.
I recall telling a Millennial who I have worked with for a few years now that my shares in this fund went up by over six thousand in value in one stinking day! I was up nearly eighteen thousand on my shares at that time in just one account. I also was up another five grand or so in my E-Trade account.
Well, you know the old adage...hindsight is 20/20.
The Millennial, who had just purchased a few hundred dollars worth of stocks via an app called Robin Hood was amazed and thought me a big-time trader. Not at all, I told him. My brother worked for two trading firms where he dealt in millions per day in very complex trades prior to becoming a lawyer.
I am not going to go into those details, like the calendar-based futures spreads that he worked in or pitting one foreign exchange versus another at 3:00 a.m. our time. He could write about that someday if he wishes. He would often make more or lose more in a week that I earned in an entire year, and he is seven years younger than I am.
No, I must admit that I suffered from greed at that point, although it did not feel like greed at the time.
What it felt like was that maybe I should sell my shares when I am up twenty-five grand. Maybe up fifty. Maybe a hundred. I would fall asleep sometimes wondering if my shares of NUGT would go high enough that I could pay off my $140,000 mortgage debt with it at some point. Of course, I wanted it to go higher than that, since the capital gains tax would be monumental were I to use all the gains to pay off our home.
Did that actually happen?
HELL NO!
Even before Trump was elected in fall of 2016, the stock market began its steady rise and the dollar became stronger. Not that NUGT exactly follows the price of gold, but it mirrors it enough that the leveraged nature of the gold miner company stocks fall rapidly with every small movement of gold becoming weaker against the dollar.
When you can make big money investing in almost any stock, why purchase something that does not produce anything tangible, nothing that you can eat or use as energy, and something that does not pay a dividend?
Well, to make a long story short, I have held this dog for the past two years since it has fallen from the equivalent of $143 per share down to the mid-twenties.
Check out the last four years of this thing per my stock and investing Bible, Yahoo! Finance:
In watchlist
Currency in USD
| Date | Open | High | Low | Close* | Adj Close** | Volume |
|---|---|---|---|---|---|---|
| Mar 20, 2018 | 0.065 Dividend | |||||
| Mar 01, 2018 | 21.91 | 26.27 | 21.25 | 24.40 | 24.33 | 135,629,800 |
| Feb 01, 2018 | 31.75 | 32.76 | 21.40 | 22.75 | 22.69 | 159,188,600 |
| Jan 01, 2018 | 32.57 | 37.96 | 30.27 | 32.39 | 32.30 | 126,576,600 |
| Dec 01, 2017 | 28.12 | 32.29 | 23.96 | 31.70 | 31.61 | 116,002,100 |
| Nov 01, 2017 | 29.54 | 31.12 | 27.70 | 28.34 | 28.26 | 110,004,800 |
| Oct 01, 2017 | 31.43 | 35.95 | 28.40 | 29.14 | 29.06 | 128,080,800 |
| Sep 01, 2017 | 40.50 | 44.03 | 31.75 | 31.84 | 31.75 | 127,129,500 |
| Aug 01, 2017 | 32.45 | 40.37 | 28.78 | 39.90 | 39.79 | 153,261,700 |
| Jul 01, 2017 | 28.75 | 33.83 | 25.70 | 32.80 | 32.71 | 185,945,700 |
| Jun 01, 2017 | 32.73 | 38.84 | 29.05 | 30.26 | 30.17 | 254,174,800 |
| May 01, 2017 | 1/4 Stock Split | |||||
| May 01, 2017 | 31.70 | 38.94 | 26.90 | 33.84 | 33.74 | 260,868,100 |
| Apr 01, 2017 | 36.16 | 46.48 | 30.28 | 32.60 | 32.51 | 815,203,900 |
| Mar 01, 2017 | 35.80 | 40.00 | 29.60 | 35.96 | 35.86 | 965,824,000 |
| Feb 01, 2017 | 42.32 | 54.80 | 36.80 | 37.92 | 37.81 | 871,304,000 |
| Jan 01, 2017 | 31.44 | 46.56 | 31.00 | 44.32 | 44.20 | 1,186,663,800 |
| Dec 01, 2016 | 30.68 | 37.04 | 7.51 | 7.76 | 7.74 | 1,259,569,400 |
| Nov 01, 2016 | 60.04 | 66.24 | 28.80 | 31.72 | 31.63 | 960,768,500 |
| Oct 01, 2016 | 74.56 | 76.56 | 44.36 | 56.24 | 56.08 | 728,289,600 |
| Sep 01, 2016 | 70.08 | 100.24 | 68.60 | 75.72 | 75.51 | 557,827,000 |
| Aug 25, 2016 | 5/1 Stock Split | |||||
| Aug 01, 2016 | 127.02 | 143.18 | 70.08 | 71.16 | 70.96 | 212,604,100 |
| Jul 01, 2016 | 109.81 | 135.86 | 93.68 | 128.41 | 128.05 | 100,872,000 |
| Jun 01, 2016 | 59.60 | 101.78 | 56.52 | 100.90 | 100.61 | 144,682,000 |
| May 01, 2016 | 98.40 | 99.17 | 53.86 | 58.46 | 58.29 | 166,778,300 |
| Apr 01, 2016 | 43.20 | 95.34 | 42.23 | 95.26 | 94.99 | 156,832,700 |
| Mar 01, 2016 | 47.19 | 59.72 | 40.53 | 46.83 | 46.70 | 209,074,500 |
| Feb 01, 2016 | 21.16 | 50.32 | 20.10 | 46.43 | 46.30 | 216,031,700 |
| Jan 01, 2016 | 21.18 | 25.20 | 13.92 | 20.54 | 20.48 | 193,896,300 |
| Dec 01, 2015 | 20.87 | 25.36 | 17.60 | 19.42 | 19.37 | 196,964,200 |
| Nov 01, 2015 | 26.73 | 29.05 | 17.36 | 20.36 | 20.30 | 214,775,300 |
| Oct 01, 2015 | 1/10 Stock Split | |||||
| Oct 01, 2015 | 23.46 | 42.08 | 21.24 | 27.75 | 27.67 | 141,833,600 |
| Sep 10, 2015 | 1/1 Stock Split | |||||
| Sep 01, 2015 | 27.36 | 29.44 | 18.88 | 23.04 | 22.98 | 798,397,100 |
| Aug 01, 2015 | 26.88 | 42.08 | 2.61 | 3.13 | 3.12 | 1,075,001,700 |
| Jul 01, 2015 | 64.16 | 67.52 | 24.48 | 27.44 | 27.36 | 787,681,000 |
| Jun 01, 2015 | 91.36 | 92.64 | 64.00 | 64.72 | 64.54 | 357,758,700 |
| May 01, 2015 | 94.48 | 113.52 | 82.64 | 88.00 | 87.75 | 285,341,100 |
| Apr 01, 2015 | 78.88 | 109.20 | 77.92 | 97.60 | 97.33 | 340,519,100 |
| Mar 01, 2015 | 126.24 | 126.80 | 65.36 | 75.36 | 75.15 | 575,281,000 |
| Feb 01, 2015 | 139.36 | 156.40 | 107.92 | 125.36 | 125.01 | 301,181,500 |
| Jan 01, 2015 | 84.00 | 171.20 | 82.80 | 148.48 | 148.06 | 342,026,900 |
| Dec 01, 2014 | 103.52 | 122.24 | 72.56 | 89.28 | 89.03 | 60,126,200 |
| Nov 01, 2014 | 92.00 | 135.68 | 76.08 | 95.44 | 95.17 | 41,129,200 |
| Oct 01, 2014 | 186.64 | 198.00 | 86.08 | 87.36 | 87.11 | 26,562,900 |
| Sep 01, 2014 | 346.24 | 346.80 | 181.76 | 183.04 | 182.52 | 14,411,900 |
| Aug 01, 2014 | 352.00 | 409.92 | 326.00 | 365.92 | 364.89 | 7,362,600 |
| Jul 01, 2014 | 371.84 | 425.76 | 337.28 | 341.60 | 340.64 | 10,480,200 |
| Jun 01, 2014 | 227.76 | 375.36 | 218.00 | 369.92 | 368.88 | 10,795,900 |
| May 01, 2014 | 281.44 | 310.32 | 216.16 | 232.16 | 231.51 | 9,470,300 |
| Apr 01, 2014 | 280.88 | 340.96 | 255.04 | 291.12 | 290.30 | 12,096,900 |
| Mar 01, 2014 | - | - | - | - | - | - |
| *Close price adjusted for splits.**Adjusted close price adjusted for both dividends and splits. | ||||||
But for those of you who put some money out there into the market, you can see that my shares were worth over $400 per share in summer of 2014, nearly four years ago. You can also see how those same shares plummeted to the twenties by the following July.
One thing about this ETF and the Money Mensch. I bought and sold shares before this chart even starts four years ago, I owned shares as they reached great heights in summer of 2014, and I own shares of it as I write this.
As a matter of fact, I put in an order for more shares last night after posting about the great advice that Coach Holtz gave me.
I wonder what he would say about a middle-aged, middle class father of two with a mountain of bills to pay holding onto a stock when he was up over twenty grand to the point that he is down nearly ten grand on those same shares.
Anyway, I put in an order for twenty-five more shares last night because the number of shares in my Capital One account were diminished to a crooked number, 175, following one hundred shares being called away in 2016 and the reverse split last May as the share price plummeted.
I did not.
What did happen was that the trade was executed first thing in the morning, and the confirmation landed in my inbox when I checked my Yahoo! mail mid-morning.
You can see that I placed a limit order of $23.40 per share and paid $6.95 in commission, for a total of $589.45. Thus, I now hold two hundred shares in my Capital One trading account, and I do not wish to share how many shares I have in my original trading account with E-Trade. Like I wrote, I am down a lot on it.
But I do not share this information for sympathy, or for someone to try to hack into these accounts.
I write it because I believe that gold is due for an upswing.
I'm not sure why, because I always think this.
Not to the point of those nutty Gold Bugs, who think that all currencies are fiat and that only gold holds true value when the shit hits the fan.
If you want to read some way out theories, read long online debates about the merits of buying real or virtual gold, how and where to store it and the like.
You will read about people who store physical gold in other countries. You read people who claim that their guns and shelters will be more valuable than a useless metal that nobody accepts. You will read about people whose entire fortunes are held in gold coins hidden in the ground. You'll read a lot of bat shit crazy stuff.
Me, I like to invest in gold via this ETF.
I started by making a quick grand on it. That was probably not a great thing, since it got me hooked on this thing.
I bought more and more until I was up over twenty grand on it.
I sold a hundred shares via a covered call in 2016, collecting nearly a grand on selling the call itself and another six or so grand on the increased share price.
I held onto this dog as it plummeted like a falling rock from over four hundred per share to the twenties, considering reverse splits.
I hold hundreds of shares including twenty-five more purchased today.
I put in writing here, as the boxer Roberto Duran said in the famous fight with Sugar Ray Leonard: "No mas!"
I also share this with you so, someday, when I write a post about how I made ten or twenty grand on a stock, I can link back to this and add some more details on my thinking about this and I can look back on more of the trades that I have made in this fund that I both love and hate.
I have loved it in the past (when I made money on it), but hate it today.
I also hereby recognize the distinct possibility that it will continue declining in value over the coming months and years and that nobody should view this thing as a long-term investment, like it has become for me.
So am I a Gold Bug?
I invest in Vanguard's Wellington fund and Primecap fund with money that I want and need to grow steadily over the years.
My own IRA is split between two T. Rowe Price funds, both of which I will be sending money to by Paying Myself First on the first of the month, the Blue Chip Growth fund and the Capital Appreciation fund. I have invested my wife's entire IRA with the Vanguard S&P 500 fund.
No, don't call me a Goldbug.
As I thought of a snappy, SEO-friendly name for what I am, and considering that I am a Jewish mensch who is trying to do whatever I can to support my family, I feel more like a Goldberg, Goldstein or Goldman.
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