ProShares ETFs - dummies

By Russell Wild

ProShares offers nearly the same number of ETFs as PowerShares. The Short QQQ ProShares (PSQ) allows you to short the NASDAQ 100: If the NASDAQ goes down 5 percent tomorrow, your ETF will go up (more or less) 5 percent. Of course, the inverse is true, as well.

Other ProShares offerings allow you to short the Dow, the S&P 500, or the S&P MidCap 400, among other indexes. The Ultra ProShares ETFs allow you to move with the market at double the speed. Ultra QQQ ProShares (QLD), for example, is designed to rise 10 percent when the NASDAQ 100 goes up 5 percent (and, of course, to fall 10 percent when the NASDAQ 100 goes down 5 percent).

All these percentages are rough approximations. In the real world, you’re going to profit less and risk more than you hoped for.

Be aware of shorting and leveraging strategies, especially as these ETFs employ them, which is to say on a daily returns basis. In short, selling short is akin to market timing, and market timing, while loads of fun, isn’t often profitable. As for the less-than-double-your-money, more-than-double-your-risk ProShares Ultra ETFs, well it’s hard to see the logic in that.

For more information, call 866-776-5125 or visit the ProShares website.