What would have been a riskier investment in the past three months — cryptocurrency or a specialized exchange-traded fund (ETF)?
If you’re Fidelity Investments, it’s the ETF by far.
Fidelity has banned all of its clients from purchasing three so-called “fear gauge” securities.
Fidelity is attempting to prevent its clients from the real risk of losing their entire investment on short ETFs designed for heavy betting on low volatility in the stock market.
The banned funds include ProShares Short VIX Short-Term Futures ETF. The fund fell by almost 83% on Feb. 6, although its price improved by about 10% by the end of that week.
Fidelity also barred its clients from investing in VelocityShares Daily Inverse VIX Medium-Term ETN, which fell in value by 23% during the first week of February but rebounded by about 5% by the end of the week.
In addition, the investment giant banned VelocityShares Daily Inverse VIX Short-Term ETN, which dropped about 85% on Feb. 5 in after-hours trading.
Fear gauge funds unaffected by Fidelity’s edict also lost ground in recent trading.
The LJM Preservation and Growth Fund, which was once valued at over $800 million and thrived on strategic, short-term volatility investments, lost more than 80% of its overall market value during the recent Wall Street volatility freefall.
The LJM Preservation and Growth Fund recently ceased operations. A class-action lawsuit followed.
After years of steady rise, the global financial markets fell into correction territory recently, shaving off trillions of value in just hours.
Those years of steady upward motion implied very low volatility, which these funds allowed investors to bet would continue unabated.
Investors in short volatility funds profited. Then the correction made volatility shoot suddenly higher.
Being leveraged investments, the short funds immediately lost big, magnifying investor losses and greatly increasing in risk.
Fidelity’s moves are an attempt, perhaps late in the game, to to protect short-sighted investors from their own bad judgement.
In a public statement Fidelity said that it was trying “to protect customers from outsized risk during the current market environment.”
Bulletproof Your Portfolio Now!A smart investor should be prepared for anything. That’s why David Frazier created the Bulletproof Wealth Report. This comprehensive investment service is everything you will need to survive and thrive in the looming meltdown. In other words: It’s how anyone can make their portfolio bulletproof. It’s a mix of fast-growing, leading companies that are the engine of American prosperity. To that he adds a healthy dose of “insurance policies” i.e. stocks and funds that benefit when the next recession strikes. The future favors the prepared. You can be prepared. Not only that — you can profit.
Bulletproof My Portfolio!
Cryptocurrency Will Shine Through the Coming ChaosWhile the U.S. spends and spends and spends its way into oblivion, the eventual result will be inflation. Serious inflation. The dollar will crash, gold will shoot higher and Bitcoin, well, it can only become more scarce and more valuable. There’s a natural ceiling to the number of Bitcoins that will exist — ever. By design, there can only be 21 million of them. Soon, the ceiling will be hit. Now is the moment to get into cryptocurrency. There’s a been a rise of late, but prices are consolidating, setting up for the next leap higher. Grab Keene Little's widely followed cryptocurrency newsletter, Crypto Wealth Protocol completely risk free.
Yes! Send Me A Free Issue