How my short trade on Russian stocks unravelled

This has been a disappointing run for the Opportunistic and Adventurous portfolio.

In December, I bought the Direxion Daily Russia Bear 3X Exchange Traded Fund Trust (RUSS) as a way to short the Russian stock market.

The plan

I calculated that betting against Russian stocks seemed a reasonable trade since the price of oil had dropped through the floor and the government relied on oil revenue to balance its books.

The U.S. and European economic sanctions against Russia over the Ukrainian conflict would keep stocks under pressure I reasoned.

I also thought the Russian central bank’s move to raise interest rates to bolster the ruble would hurt the economy and the stock market.

The result

Instead, the (Russian Micex Index) has rallied sharply so far in 2015 and I held RUSS position far longer than I should have.

I have sold the holding and the portfolio is now entirely in cash.


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