DUG Was DOG, Not ETF To Short DOW For Great Unwind

One way not to save money is to speculate. An even better way not to save money is to accidentally speculate. We all make mistakes from time to time, but last week I made a beauty. I'm convinced in my bones that the The Great Unwind is coming and will smear the DOW across the pavement. So I decided to go short for the first time in my life, purchasing an ETF to short the DOW. The one I chose was DOG, SHRT DOW 30 PROSHARES, which attempts to provide the exact inverse of the DOW. I checked the charts of DOG vs the DOW and the tracking was excellent. I wasn't crazy about the management fee of about 1%, but I decided to buy a hundred shares (about $5000) for my SEP to see how it goes.

Well, I checked the first day, and the chart vs the DOW was a little funky, but I ignored it. I was busy the rest of the week and didn't get around to checking again until Friday. I'd lost about 10% of my speculative investment in less than five days, and I knew the DOW hadn't gone up that much!

What went wrong? When I entered the order, somehow I got DOG and DUG confused in my mind. DUG is another ETF, UltraShort Oil and Gas PROSHARES, that apparently seeks to provide double the inverse of those energy prices. In other words, oil and gas go up 5%, DUG goes down 10%. I would never speculate on the price of energy falling, if I had to speculate in energy, I'd go long, not short. In any case, DUG proved to be a real dog, and one that I'd never intended to take home from the pound. I dumped the DUG Monday and bought DOG, so I'm now short the DOW, and waiting for the great unwind.