Want to boost your portfolio?

Try some of these levered ETFs

AGA	PowerShares DB Agriculture Double Short ETN
AGQ	Ultra Silver ProShares ETF
BIB	Ultra NASDAQ Biotechnology ETF
BIS	UltraShort NASDAQ Biotechnology ETF
BDCL	UBS 2X Leveraged Long Wells Fargo Business Development Company ETN
BDD	PowerShares DB Base Metals Double Long ETN
BGU	Direxion Daily Large Cap Bull 3X Shares
BGZ	Direxion Daily Large Cap Bear 3X Shares ETF
BOM	PowerShares DB Base Metals Double Short ETN
BRIL	Direxion Daily BRIC Bull 2x Shares ETF
BRIS	Direxion Daily BRIC Bear 2x Shares ETF
BUNT	PowerShares DB 3x German Bund Futures ETN
BXDB	Barclays Short B Leveraged Inverse S&P 500 Total Return ETN
BXDC	Barclays Short C Leveraged S&P 500 Total Return ETN
BXUB	Barclays Long B Leveraged S&P 500 Total Return ETN
BXUC	Barclays Long C Leveraged S&P 500 Total Return ETN
BZQ	UltraShort MSCI Brazil ProShares ETF
CMD	UltraShort DJUBS Commodity ProShares ETF
COWL	Direxion Daily Agribusiness Bull 3x Shares ETF
COWS	Direxion Daily Agribusiness Bear 3x Shares ETF
CSMB	The 2x Monthly Leveraged Credit Suisse Merger Arbitrage Liquid Index ETN
CURE	Direxion Daily Healthcare Bull 3X Shares ETF
CZI	Direxion China Bear 3x Shares ETF
CZM	Direxion China Bull 3x Shares ETF
DAG	PowerShares DB Agriculture Double Long ETN
DDM	Ultra Dow 30 ProShares ETF
DEE	PowerShares DB Commodity Double Short ETN
DGP	PowerShares DB Gold Double Long ETN
DIG	Ultra Oil & Gas ProShares ETF
DPK	Direxion Daily Devloped Markets Bear 3X Shares ETF
DRN	Direxion Daily Real Estate Bull 3X Shares ETF
DRR	Market Vectors Double Short Euro ETN
DRV	Direxion Daily Real Estate Bear 3X Shares ETF
DSTJ	JP Morgan 2X Short US Long Treasury Futures ETN
DSXJ	JP Morgan 2X Short US 10 Year Treasury Futures ETN
DTO	PowerShares DB Crude Oil Double Short ETN
DUG	UltraShort Oil & Gas ProShares ETF
DUST	Direxion Daily Gold Miners Bear 2x Shares ETF
DXD	UltraShort Dow 30 ProShares ETF
DYY	PowerShares DB Commodity Double Long ETN
DZK	Direxion Daily Developed Markts Bull 3X Shares ETF
DZZ	PowerShares DB Gold Double Short ETN
EIPL	Monthly 2x Leveraged ETRACS Internet IPO ETN
EMLB	iPath Long Enhanced MSCI Emerging Markets Index ETN
EMSA	iPath Short Enhanced MSCI Emerging Markets Index ETN
EDC	Direxion Daily Emerging Markets Bull 3X Shares ETF
EDZ	Direxion Daily Emerging Markets Bear 3X Shares ETF
EET	Ultra MSCI Emerging Mkts ProShares ETF
EEV	UltraShort MSCI Emerging Markets ProShares ETF
EFO	Ultra MSCI EAFE ProShares ETF
EFU	UltraShort MSCI EAFE ProShares ETF
EPV	UltraShort MSCI Europe ProShares
ERX	Direxion Daily Energy Bull 3X Shares ETF
ERY	Direxion Daily Energy Bear 3X Shares ETF
EUO	ProShares UltraShort Euro ETF
EWV	UltraShort MSCI Japan ProShares ETF
EZJ	Ultra MSCI Japan ProShares ETF
FAS	Direxion Daily Financial Bull 3X Shares ETF
FAZ	Direxion Daily Financial Bear 3X Shares ETF
FOL	FactorShares 2X Oil Bull/S&P500 Bear ETF
FSA	FactorShares 2X TBond Bull/S&P500 Bear ETF
FSE	FactorShares 2X S&P500 Bull/TBond Bear ETF
FSG	FactorShares 2X Gold Bull/S&P500 Bear ETF
FSU	FactorShares 2X S&P500 Bull/USD Bear ETF
FXP	UltraShort FTSE/Xinhua China25 Proshares ETF
GLL	UltraShort Gold ProShares ETF
GASL	Direxion Daily Natural Gas Related Bull 2X Shares ETF
GASX	Direxion Daily Natural Gas Related Bear 2X Shares ETF
IGU	ProShares Ultra Investment Grade Bond ETF
INDL	Direxion Daily India Bull 2x Shares ETF
INDZ	Direxion Daily India Bear 2x Shares ETF
ITLT	PowerShares DB 3x Italian Treasury Bond Futures ETN
JGBT	PowerShares DB 3x Japanese Govt Bond Futures ETN
JPX	UltraShort MSCI Pacific exJpn ProShares ETF
KRU	Ultra KBW Regional Banking ETF
LBJ	Direxion Daily Latin America Bull 3X Shares ETF
LBND	PowerShares DB 3X Long 25+ Year Treasury Bond ETN
LHB	Direxion Daily Latin America Bear 3X Shares ETF
LSKY	ETRACS Monthly 2xLeveraged ISE Cloud Computing Total Return Index ETN
LTL	Ultra Telecommunications ProShares ETF
MATL	Direxion Daily Basic Materials Bull 3X Shares ETF
MATS	Direxion Daily Basic Materials Bear 3X Shares ETF
MFLA	iPath Long Enhanced MSCI EAFE Index ETN
MFSA	iPath Short Enhanced MSCI EAFE Index ETN
MLPL	UBS ETRACS 2x Leveraged Long Alerian MLP Infrastructure Index ETN
MVV	Ultra Mid Cap 400 ProShares ETF
MWJ	Direxion Daily Mid Cap Bull 3X Shares ETF
MWN	Direxion Daily Mid Cap Bear 3X Shares ETF
MZZ	UltraShort Mid Cap 400 ProShares ETF
NUGT	Direxion Daily Gold Miners Bull 2x Shares ETF
PST	UltraShort 710 Year Treasury ProShares ETF
QID	UltraShort QQQ ProShares ETF
QLD	Ultra QQQ ProShares ETF
RETL	Direxion Daily Retail Bull 2X Shares ETF
RETS	Direxion Daily Retail Bear 2X Shares ETF
REW	UltraShort Technology ProShares ETF
ROLA	iPath Long Extended Russell 1000 TR Index ETN
ROSA	iPath Short Extended Russell 1000 TR Index ETN
ROM	Ultra Technology ProShares ETF
RSU	Rydex 2x S&P 500 ETF
RSW	Rydex Inverse 2x S&P 500 ETF
RTLA	iPath Long Extended Russell 2000 TR Index ETN
RTSA	iPath Short Extended Russell 2000 TR Index ETN
RUSL	Direxion Daily Russia Bull 3x Shares ETF
RUSS	Direxion Daily Russia Bear 3x Shares ETF
RXD	UltraShort Health Care ProShares ETF
RXL	Ultra Health Care ProShares ETF
SAA	Ultra Small Cap 600 ProShares ETF
SBND	PowerShares DB 3X Short 25+ Year Treasury Bond ETN
SCC	UltraShort Consumer Services ProShares ETF
SCO	UltraShort DJUBS Crude Oil ProShares ETF
SDD	UltraShort Small Cap 600 ProShares ETF
SDK	UltraShort Russell Mid Cap Growth ProShares ETF
SDOW	UltraPro Short Dow 30 ETF
SDP	UltraShort Utilities ProShares ETF
SDS	UltraShort S&P500 ProShares ETF
SFK	UltraShort Russell1000 Growth ProShares ETF
SFLA	iPath Long Extended S&P 500 TR Index ETN
SFSA	iPath Short Extended S&P 500 TR Index ETN
SICK	Direxion Daily Healthcare Bear 3X Shares ETF
SIJ	UltraShort Industrials ProShares ETF
SJF	UltraShort Russell 1000 Value ProShares ETF
SJH	UltraShort Russell2000 Value ProShares ETF
SJL	UltraShort Russell Mid Cap ValUE ProShares ETF
SKF	UltraShort Financials ProShares ETF
SKK	UltraShort Russell 2000 Growth ProShares ETF
SMDD	UltraPro Short MidCap 400 ETF
SMK	UltraShort MSCI Mexico Investment ProShares ETF
SMN	UltraShort Basic Materials ProShares ETF
SOXL	Direxion Daily Semiconductor Bull 3x Shares ETF
SOXS	Direxion Daily Semiconductor Bear 3x Shares ETF
SPXU	ProShares Ultra Pro Short S&P 500 ETF
SQQQ	UltraPro Short QQQ ETF
SRS	UltraShort Real Estate ProShares ETF
SRTY	UltraPro Short Russell 2000 ETF
SSDL	ETRACS Monthly 2x Leveraged ISE SSD Index ETN
SSG	UltraShort Semiconductor ProShares ETF
SSO	Ultra S&P 500 ProShares ETF
SZK	UltraShort Consumer Goods ProShares ETF
TBT	UltraShort 20+ Year Treasury ProShares ETF
TBZ	UltraShort 37 Year Treasury ETF
TLL	UltraShort Telecommunications ProShares ETF
TMF	Direxion Daily 30 Year Treasury Bull 3X Shares ETF
TMV	Direxion Daily 30 Year Treasury Bear 3X Shares ETF
TNA	Direxion Daily Small Cap Bull 3X Shares ETF
TPS	ProShares UltraShort TIPS ETF
TQQQ	UltraPro QQQ ETF
TVIX	VelocityShares Daily 2x VIX Short Term ETN
TVIZ	VelocityShares Daily 2x VIX Mid Term ETN
TWM	UltraShort Russell 2000 ProShares ETF
TWQ	UltraShort Russell 3000 ProShares ETF
TYD	Direxion Daily 10 Year Treasury Bull 3X Shares ETF
TYH	Direxion Daily Technology Bull 3X Shares ETF
TYO	Direxion Daily 10 Year Treasury Bear 3X Shares ETF
TYP	Direxion Daily Technology Bear 3X Shares ETF
TZA	Direxion Daily Small Cap Bear 3X Shares ETF
UBR	Ultra MSCI Brazil
UBT	Ultra 20+ Year Treasury ETF
UCC	Ultra Consumer Services ProShares ETF
UCD	Ultra DJUBS Commodity ProShares ETF
UCO	Ultra DJUBS Crude Oil ProShares ETF
UDNT	PowerShares DB 3x Short US Dollar Index Futures ETN
UDOW	UltraPro Dow 30 ETF
UGE	Ultra Consumer Goods ProShares ETF
UGL	Ultra Gold ProShares ETF
UJB	ProShares Ultra High Yield Bond ETF
UKF	Ultra Russell1000 Growth ProShares ETF
UKK	Ultra Russell 2000 Growth ProShares ETF
UKW	Ultra Russell Mid Cap Growth ProShares ETF
ULE	Ultra Euro ProShares ETF
UMDD	UltraPro MidCap 400 ETF
UMX	Ultra MSCI Mexico Investable Market
UPRO	ProShares Ultra Pro S&P 500 ETF
UPV	Ultra MSCI Europe ETF
UPW	Ultra Utilities ProShares ETF
URE	Ultra Real Estate ProShares ETF
URR	Market Vectors Double Long Euro ETN
URTY	UltraPro Russell 2000 ETF
USD	Ultra Semiconductor ProShares ETF
UST	Ultra 710 Year Treasury ETF
UUPT	PowerShares DB 3x Long US Dollar Index Futures ETN
UVG	Ultra Russell 1000 Value ProShares ETF
UVT	Ultra Russell 2000 Value ProShares ETF
UVU	Ultra Russell Mid Cap Value ProShares ETF
UWC	Ultra Russell 3000 ProShares ETF
UWM	Ultra Russell 2000 ProShares ETF
UXI	Ultra Industrials ProShares ETF
UXJ	Ultra MSCI Pacific ExJapan
UYG	Ultra Financials ProShares ETF
UYM	Ultra Basic Materials ProShares ETF
VZZB	iPath Long Enhanced S&P 500 VIX MidTerm Futures ETN
XPP	Ultra FTSE/Xinhua China 25 ProShares ETF
YCL	Ultra Yen ProShares ETF
YCS	UltraShort Yen ProShares ETF
ZSL	ProShares UltraShort Silver ETF

The persistence of Home Bias (explained)

Every time I teach international portfolio theory to my students I have to face the inevitable question.

Diversifying one's portfolio --> good.
International diversification --> Much better

If it is so good to diversify abroad... then why don't people do it?
well... This is Home Bias, or the tendency of investors to hold a disproportionate amount of shares from their own home country.
The chart below will serve for illustration (figures as of 2010):

The US stock market represents almost 30% of the world's stock market. (Down from 40% in 2005) A rational American investor should have 30% of her money in American stocks. A French investor should have only 3.55% of his money in French companies and the rest spread through the world. In reality investors hold most of their portfolio in companies in their own countries.
The next chart shows that Germans hold almost 50% of their portfolio in German stocks.  If they were rational, they should hold no more than 3%.

To make matters worse, another 35% is Eurozone + UK

This is not rational. Investors are leaving money on the table. It is a puzzle.

The answers to this puzzle go from
Capital immobility... Investors can not move their money freely across countries... (taxes and other restrictions) to Information immobility... foreigners have better information about their own countries, How can an American investor make sense of the French or Chilean markets. A third explanations refers to Consumption hedging; Mexican investors invest in Mexico because they consume (now and in the future) in Mexican Pesos. Mexican companies provide a natural hedge against currency fluctuations which can be very wide and have profound implications. See my blog on Brazil versus Mexico.

There is a great video by Ken French from Tuck further explaining the topic.


I am an optimistic. A recent article in the Financial Times shows that in 1980 Americans held 2% of their portfolio overseas by 2007 it was 27%. This is a dramatic improvement.

Have you checked your Norepinephrine lately?

Cholesterol and glucose levels are things of the past for financial professionals...

According to a recent study by Takahashi et al. (2012) we should check traders for their levels of norepinephrine. It turns out that this chemical is crucial for the way we handle losses.
People with high levels of norepniphrine are "numb" or less sensitive to the pain of losing money. They could make better traders.
Those poor souls with high levels of the chemical suffer from loss aversion. They show more emotions for loses than gains.

Brazil versus Mexico

Brazil gets all the press. After all, It is the "B" in brics.
Mexico... Well you have the drug cartels and the doings of Carlos Slim.

But something else is going on quietly. Mexican automakers are gaining productivity and market share. To the point that Brazil is scared. So concerned that insiders believe that Dilma Rousseff (Brazil's president) may be close to revert a free trade agreement (only for cars) between the countries and it could even impose a possible tariff to Mexican cars imported into Brazil.
Why the rush? A FT article indicates that last year Brazilian imports of Mexican cars grew 40% to reaching a deficit on USD 1.6 billion.

Yes, Mexico and China are able to export large numbers of cars to Brazil. At the same time Brazilian cars are not enjoying the same bonanza abroad.
The reason for this drop in competitiveness? There is never only 1 reason but the chart below surely explains a lot.

The BRL has appreciated against the dollar while the MXN has depreciated. Things made in Brazil are more (a lot more) expensive than those made in Mexico...


Furthermore... look at the euro... same picture

If you are Ford or VW where would you put your next plant: Brazil or Mexico?

Examples of efficiency

I love earnings season as I can point to practical examples of how quickly markets assimilate new information.

This season is no different

Amazon reported disappointed earnings today... It took about 3 minutes of after hours trading for the stock to drop almost $20.

The market did not like it.

Look at the volume traded!

On the Financial Media

You have to love the differences

After the news of US 4th quarter GDP released today (1/27/2012) the FT reports:

US growth accelerates to 2.8%

On yahoo finance at the same time you read (from the AP)

Stocks slip after US economic growth disappoints

I may sound counter intuitive but I prefer foreign media to learn about the US and domestic media to learn about overseas.