If you like my videos then you’ll love our FREE weekly Market Roundup. I send it out each Friday and it’s packed full of interesting insights and a roundup of the news that’s most relevant for investors pensioncraft.com/market-roundup/
It's when I come up to channels like this one that I mostly feel grateful for the Internet. The host elegantly brings valuable knowledge thar sometime ago, one would only have access through an expensive course or college. Thank you.
How would a dollar cost averaging strategy compare - would you see the same ~1/3 DCA beats lump sum? A small DCA strategy ready to pile in more as and when markets tumble feels like a hedged middle ground between doing nothing and trying to time the crash. I remember about a year ago we were all waiting for the crash, and s&p since up 33%
Would love an update on how these fared in 2023 with the interest rates and bond crush black swan. Also interested in your views on NTSX which essentially does 60/40 within a single ETF from Wisdom Tree at 1.5x leverage.
Thank you Ramin, very good video! I also did some simulations including leveraged gold to try make the portfolio less risky. The general conclusion was that it is not worth it and that you'd be better off by simply buying 100% equity. However I am now evaluating being in a very conservative portofolio (i.e. golden butterfly - GB) and switch in steps to a leveraged sp500 etf during market crashes. For example switching 20% of the GB to the leveraged sp500 when the sp500 drops by -10% from ATH, then another 20% at -20%, etc. Usually stocks tend to bounce back and in this way you would average down your entry point while getting the benefit of the bounce once it comes!
I nearly did something similar during the COVID crash, at the end I did well Investing in small cap ETFs but next time I witness a 25-30% drop I will sell my bonds and pile up on a leveraged ETF
Hi Ramin, thank you for all you do though this channel. An honest question: Seeing how the S&P 500 is currently correcting, do you think there will be an opportunity to invest some money into a 3x ETF soon? It goes without saying that nobody can time a bottom or even figure out where the bottom is. But if all the supply-chain issues slowly start resolving and the current geo-political tension subsides, it seems that a small percentages of one's portfolio could go into a 3x ETF.
Hi Aramis I don’t think most people need leverage in their portfolio, but if you are going to buy a 3x fund don’t put too much capital into it. And timing the purchase is next to impossible. Valuations in the US are still far from cheap (forward PE just crossed the 5 year average). Thanks, Ramin
Hi tommy19851 I did that for our Patreon supporters recently "How I Invest My Money" because they asked. It'd available to any current or future Patreon supporters. Thanks, Ramin.
Thanks for this analysis. I often get tqqq for a very short time right after a market crash... so far I've been somewhat lucky but after seeing this video, I will put stops on them next time.
Excellent video. Thanks Ramin. I am a big fan of broad based leveraged equity etfs. But I only buy them when they have diverged significantly to the downside from the mean e.g. as in March last year
Again amazing video, thank you. i saw this video twice and i understand almost everything you say, but i don`t understand the difference between the daily to cumulative. there is a change you explain me in one sentence or something ?
Easiest to realize with big numbers. If you have a daily reset and start with $1000 and you are leveraged 5x, and the market drops 10% first day then goes up 10%, your portfolio drops 50%, to $500. Leverage resets and then you go up 50% and end at $750. If you have cumulative leverage in the same scenario, you start with $1000 leveraged 5x = $5000 on the table, you lose 10% and are down $500 to $4500. Then you go up 10% and end at $4950. If you cash out your leveraged position, you are down $50 from your initial $1000 investment.
@@azhp42069 thank you for the great answer, i miss that. if we look on ES vs 3USL from some year you choose until today i think it was much better to buy leverage ETF dont you think ? ( and yes i understand the big risk if the market go down)
I am interested in buying leveraged etfs in Europe. My broker, Interactive Brokers, does not allow this. I requested permission for trading and they gave me a test. Didn't pass it. Too complicated questions. So annoying! Do you know which brokers allows this? I am a european investor. So, I cannot buy a US ETF. TQQQ would have been my choice. Amazing returns. Worth the risk. Wisdom Tree 3USL would be good. How can a buy this Etf?
If you can’t pass the broker’s test, take that as an indication that you shouldn’t gamble your savings away with leverage. I avoid it because I don’t understand it
@@pprb123 i did eventually. When the market fell hard, the price went down x3. Sold at a loss. You could make big money in a bull market. But too risky. Anyway, all into crypto right now.
Holding leveraged equity only when they are above the 200 day SMA seems to give good returns without devastating drawdowns. You’d need an iron stomach to go all in though.
In previous research, leveraged ETFs’ main downside was value decay and thus would not have value if held long term. But this is not the case based on this video. By any chance could you enlighten me on this?
Time decay is bad only in choppy and bear markets. If you time market correctly and hold through bull market, there wont be any problem with time decay. In contrast, your gains will be much more higher than 3x due to rebalancing each day
Hey Ramin, Recently, another UK finance and investing channel was recommending the use of Spread betting on ETF futures as a pretty safe way of getting 2-3x leverage on index funds. Do you have a view on this, or using spread betting on futures as leverage for amplifying index investing returns?
I think that video may have been what led to this one. Someone posted a link to the original video on the PensionCraft Slack channel, and we had a discussion about whether or not it was a wise strategy. The general conclusion (just as Ramin says here) is that leverage isn't necessarily bad, as long as you have the willpower to stay invested through those severe draw-downs.
My personal view is that the only risk with futures spread betting is that the future price is not equal to the spot price at the time the future is purchased. They do however converge to the same price at expiry. For example in case of gold the future contract is usually higher that the spot price when the contract is created (contango). This translates in a drag in your returns since you are buying at a higher price. The question now becomes: considering this extra drag, is the spread betting method still beneficial?
I have discussed this previously with Ramin. The benefit of a leveraged etf is that you cannot lose more than what you put in, no margin calls etc. And very simple to do.
I’m up 95% on 3x Long Tesla in just over 2 months… I’m finding hard to believe as I never made anything greater than 15% on any other stocks…. Not sure how long I should hold it for and much much fees they will charge me? This leverage is only 7% of my portfolio so I am ok with the risk…
So you're saying that we should buy TQQQ, and put a trailing stop loss of 15%, sit out the downturns, or DCA back into them, and move the rest of the position in when the bull starts back up?
I buy stocks on leverage....typically x3 and x5 and have been doing so for nearly 3 years but you need to know what you're doing...comments section on videos like this blow my mind...I can't drive a HGV but think i might have a go tomorrow would end in disaster...why do people think they can play with stocks/forex whatever and make money..you need to learn first..it's not rocket science. ..
Thanks for a great VDO :) Could you elaborate on the difference between "3x Cumulative" and "3x Daily" ? ... is it something like an alpha slippage to make them mathematically different so much ? with that, I guess most of the 3x ETF available publicly (e.g. UPRO) is 3x Daily. Am I understand correctly? Thank you very much for a kind response
Imagine you buy a security at $1, and it falls 20% next day to $0.8, and rebounds 25% back to $1. Now imagine buying the same security but with 3x daily leverage at 1$. It would fall 60% the first day to $0.4, then it would rebound 75% to $0.7. As you can see, it doesn't end the same value as the initial value. The problem is that the amount of leverage is reset everyday, it doesn't stay constant. If it stayed constant, the results would be leveraged cumulative but it would pose a huge risk to the fund.
:o first leverage sounded terrible, but leverage for treasury bonds sounds more attractive to me in this low-yield world. I'm going to research that a little more, after all, I was already considering high yield bond funds, so maybe something with the same amount of risk but with negative correlation to stocks could be very appealing for mid-term investments.
How do these funds work when you buy their shares? Do they buy long / short sell sp500 stocks for you? What hapens when you sell a fund like that does the fund sells long positions / buys its shares and close short positions for you? What's happening behind the scenes? Do you have liquidity issue with the fund shares themselves or just have a short squeeze risk with the underlying assets? Thanks.
How does say running a 2x levered ETF compared to a strategy of using Offset Mortgage (eg2% interest) to double you otherwise investments of free cash ? This also enables you to invest via any of the available investment universe be that your favourite Funds, ETF’s, EFT’s or individual Stocks ?
The 3x S&P ones seem pretty good, maybe wait for a 30-50% market crash and average into to them depending on how big the crash is, only with a small allocation of a portfolio.
Is it true that wisdom s&p 500x3 is not covered by FSCA? . Is this true of all leveraged fund's? And why does the KID document recommend holding for only 1 day ?? I'm a little confused about long term holding
I think there's a large gap missing from this video: check indices which have only modestly increased or have been largely flat--the levered funds will underperform their non-levered counterparts.
An excellent video, very informative from a person that been investing in leaveraged etf for over a decade quite successfully. I learnt alot. Mainly that I've been very lucky not to have been financially destroyed.
@@Pensioncraft it was very informative... and well researched. I will look at my portfolio far differently from now on and reduce my exposure to leveraged etfs, even though its done well so far..its basically been luck.
I think most people, myself included, would not be able to stomach a multi-year downturn with this much risk. Especially as their portfolio gets larger and the stakes are higher. I take some leverage on my house, with a 30yr fixed at 2.375% interest.
My friend is running at 2.5x leverage right now. I'm sure he's feeling smart as heck since he's getting mega returns but the moment the market plummets due to Delta or the middle east he's gonna be feeling like a real moron. The other thing people forget about leverage is you have to pay interest on that loaned money, which amplifies losses even more.
You don’t really mention the daily decay in leveraged etfs….they “reset” every dAy….inverse etfs are a good way to destroy value except for immediate drops….buying and holding is a fools game due to decay
As I understand it, the performance takes into account this daily reset. A 3x S&P500 would return approximately double the s&p given the daily reset, not return triple the s&p
Stop listening to idiots. Volatility decay is simply what happens to everything-takes a greater than 10% recovery to recover from a 10% drop. The fact is this- it works in reverse too. Look at returns of UPRO Vs VOO or TQQQ vs QQQ -over different time periods you will one or the other outperforming. Over longer time frames both UPRO and TQQQ do significantly better then 3x the underlying. Of course, if we go sideways for ages, the vol decay will eat away, and if you look carefully at charts you can see where (for eg) Qqq outperforms TQqq. Over time (as long as equities go up), then leverage wins.. I hold TMF and TQQQ long term.. Daily decay? Who cares? Look at charts. Hold these long enough and you can withstand the drawdowns and still be miles ahead. Its very hard to stick with-you will doubt your plan at least once a month.. Works though. Just don't go nuts and buy too much.
False. This is a popular misconception. Look at the longer term returns for any of the levered long positions on the S&P500, Dow or Nasdaq. As long as the underlying has positive upwards trend with relatively low volatility, these products can work out over the long term
It sounds to me like most people would get better returns if they just buy a 3x leveraged S&P 500 ETF and lock their trading account password in a bank vault for 20-30 years.
Hi @Benjamin Bate I agree that might be a good strategy. But Michael made a good pointin our Many Happy Returns podcast which is that if there's a _really_ big drawdown the ETF could get closed as its value falls to almost zero. That would crystallize your loss. So you'd have to buy a new 3x levered fund as quickly as possible if that happened. many-happy-returns.captivate.fm/episode/leverage Thanks, Ramin.
Said by someone who probably holds huge leverage in their mortgage…? Catchphrases like this are rarely useful and stop people really understanding the maths. Leverage can be a great tool!
Well leverage is typically a bad idea, and overpriced art is typically a bad idea as an investment. You do the math there. Bad investment, plus bad loan, equals a REALLY bad time.
Very much like the fact you don't dismiss them outright as some do and mention that upon a market crash or correction these are certainly something to look at. For me subsequent to 2022 inflation/macro market crash, I made about a million dollars off a 200k investment into FNGU from January 2023 till now.
If you like my videos then you’ll love our FREE weekly Market Roundup. I send it out each Friday and it’s packed full of interesting insights and a roundup of the news that’s most relevant for investors pensioncraft.com/market-roundup/
It is good.
It's when I come up to channels like this one that I mostly feel grateful for the Internet. The host elegantly brings valuable knowledge thar sometime ago, one would only have access through an expensive course or college. Thank you.
Glad you enjoy it!
Right, or after an expensive loss!
Great video. Already shared. I’ve been trying to explain my friends about the perils of leveraged ETF but to no avail.
Definitely liking the idea of getting some TQQQ or SOXL during this time, thanks for helping make a more educated decision.
How would a dollar cost averaging strategy compare - would you see the same ~1/3 DCA beats lump sum?
A small DCA strategy ready to pile in more as and when markets tumble feels like a hedged middle ground between doing nothing and trying to time the crash. I remember about a year ago we were all waiting for the crash, and s&p since up 33%
Thank you so much . I have had a few success but only short term hold. Listening to your blog is always awakening and nourishing financially.
Wonderful!
Would love an update on how these fared in 2023 with the interest rates and bond crush black swan. Also interested in your views on NTSX which essentially does 60/40 within a single ETF from Wisdom Tree at 1.5x leverage.
You do know how to read a chart don't you?
Thank you Ramin, very good video!
I also did some simulations including leveraged gold to try make the portfolio less risky. The general conclusion was that it is not worth it and that you'd be better off by simply buying 100% equity.
However I am now evaluating being in a very conservative portofolio (i.e. golden butterfly - GB) and switch in steps to a leveraged sp500 etf during market crashes.
For example switching 20% of the GB to the leveraged sp500 when the sp500 drops by -10% from ATH, then another 20% at -20%, etc.
Usually stocks tend to bounce back and in this way you would average down your entry point while getting the benefit of the bounce once it comes!
I nearly did something similar during the COVID crash, at the end I did well Investing in small cap ETFs but next time I witness a 25-30% drop I will sell my bonds and pile up on a leveraged ETF
@@vigilantexx I got in on SOXL at $29 per.
Soo these are basically the king of making short trades?
Aren't you also paying 4x the short-term finance *interest* when you have 5x leverage?
hi
So say im long leverage etf and i lost 100% from decay or movement, but then the etf go up 200%, i gained 100%?
thanks
bayu
Hi Ramin, thank you for all you do though this channel. An honest question: Seeing how the S&P 500 is currently correcting, do you think there will be an opportunity to invest some money into a 3x ETF soon? It goes without saying that nobody can time a bottom or even figure out where the bottom is. But if all the supply-chain issues slowly start resolving and the current geo-political tension subsides, it seems that a small percentages of one's portfolio could go into a 3x ETF.
Hi Aramis I don’t think most people need leverage in their portfolio, but if you are going to buy a 3x fund don’t put too much capital into it. And timing the purchase is next to impossible. Valuations in the US are still far from cheap (forward PE just crossed the 5 year average). Thanks, Ramin
Excellent- as always 😀
Thank you! Cheers!
3:50 why cut off the chart at the drop?? Markets have been incredibly strong since then. That would have been very useful to see
can you post an update on your latest pension vanguard portofolio?
Hi tommy19851 I did that for our Patreon supporters recently "How I Invest My Money" because they asked. It'd available to any current or future Patreon supporters. Thanks, Ramin.
Thanks for this analysis. I often get tqqq for a very short time right after a market crash... so far I've been somewhat lucky but after seeing this video, I will put stops on them next time.
Great video as always, im laughing a little at the hand in a fire metaphor though. is keeping your hand in the fire the correct thing to do!? haha
How do you get all these charts?
Plz reply if you know.
Excellent video. Thanks Ramin. I am a big fan of broad based leveraged equity etfs. But I only buy them when they have diverged significantly to the downside from the mean e.g. as in March last year
Thanks for sharing!
Again amazing video, thank you.
i saw this video twice and i understand almost everything you say, but i don`t understand
the difference between the daily to cumulative.
there is a change you explain me in one sentence or something ?
Easiest to realize with big numbers. If you have a daily reset and start with $1000 and you are leveraged 5x, and the market drops 10% first day then goes up 10%, your portfolio drops 50%, to $500. Leverage resets and then you go up 50% and end at $750.
If you have cumulative leverage in the same scenario, you start with $1000 leveraged 5x = $5000 on the table, you lose 10% and are down $500 to $4500. Then you go up 10% and end at $4950. If you cash out your leveraged position, you are down $50 from your initial $1000 investment.
@@azhp42069 thank you for the great answer, i miss that.
if we look on ES vs 3USL from some year you choose until today i think it was much better to buy leverage ETF
dont you think ?
( and yes i understand the big risk if the market go down)
A 'drawdown' doesn't sound as bad as saying 'fall' - clever marketing from the fund management industry that has clearly caught on in common parlance.
can you end up owing with a leveraged fund? or is the worse that it can happen that your capital falls to zero?
Zero!
@@Pensioncraft thank you!
@@Pensioncraft they can approach zero
I am interested in buying leveraged etfs in Europe. My broker, Interactive Brokers, does not allow this. I requested permission for trading and they gave me a test. Didn't pass it. Too complicated questions. So annoying! Do you know which brokers allows this? I am a european investor. So, I cannot buy a US ETF. TQQQ would have been my choice. Amazing returns. Worth the risk. Wisdom Tree 3USL would be good. How can a buy this Etf?
If you can’t pass the broker’s test, take that as an indication that you shouldn’t gamble your savings away with leverage. I avoid it because I don’t understand it
Did you end up finding leveraged ETFs or investing more conservatively?
@@pprb123 i did eventually. When the market fell hard, the price went down x3. Sold at a loss. You could make big money in a bull market. But too risky. Anyway, all into crypto right now.
@@krism1225you are the definition of a clown 🤡🤡🤡
Holding leveraged equity only when they are above the 200 day SMA seems to give good returns without devastating drawdowns. You’d need an iron stomach to go all in though.
In previous research, leveraged ETFs’ main downside was value decay and thus would not have value if held long term. But this is not the case based on this video. By any chance could you enlighten me on this?
I wondered this too
Time decay is bad only in choppy and bear markets. If you time market correctly and hold through bull market, there wont be any problem with time decay. In contrast, your gains will be much more higher than 3x due to rebalancing each day
Hey Ramin,
Recently, another UK finance and investing channel was recommending the use of Spread betting on ETF futures as a pretty safe way of getting 2-3x leverage on index funds.
Do you have a view on this, or using spread betting on futures as leverage for amplifying index investing returns?
I think that video may have been what led to this one. Someone posted a link to the original video on the PensionCraft Slack channel, and we had a discussion about whether or not it was a wise strategy. The general conclusion (just as Ramin says here) is that leverage isn't necessarily bad, as long as you have the willpower to stay invested through those severe draw-downs.
@@chrisf1600 wow, sounds like I need to get onto that slack channel.
My investing friends have been discussing that video all week!
My personal view is that the only risk with futures spread betting is that the future price is not equal to the spot price at the time the future is purchased. They do however converge to the same price at expiry.
For example in case of gold the future contract is usually higher that the spot price when the contract is created (contango). This translates in a drag in your returns since you are buying at a higher price.
The question now becomes: considering this extra drag, is the spread betting method still beneficial?
I have discussed this previously with Ramin. The benefit of a leveraged etf is that you cannot lose more than what you put in, no margin calls etc. And very simple to do.
I’m up 95% on 3x Long Tesla in just over 2 months… I’m finding hard to believe as I never made anything greater than 15% on any other stocks…. Not sure how long I should hold it for and much much fees they will charge me? This leverage is only 7% of my portfolio so I am ok with the risk…
Great video. Lots of useful ways to look at things. I'm naturally debt averse, so this was nice confirmation.
Glad it was helpful!
Thank you so much, my mind was flirting with this idea, I will not use leverage.
Glad it was helpful!
So you're saying that we should buy TQQQ, and put a trailing stop loss of 15%, sit out the downturns, or DCA back into them, and move the rest of the position in when the bull starts back up?
Great video
Thanks for the visit @Matlub Ahmed
Thank you!
I buy stocks on leverage....typically x3 and x5 and have been doing so for nearly 3 years but you need to know what you're doing...comments section on videos like this blow my mind...I can't drive a HGV but think i might have a go tomorrow would end in disaster...why do people think they can play with stocks/forex whatever and make money..you need to learn first..it's not rocket science. ..
thank you taking the time to comment
hows it going
Thanks for a great VDO :)
Could you elaborate on the difference between "3x Cumulative" and "3x Daily" ? ... is it something like an alpha slippage to make them mathematically different so much ?
with that, I guess most of the 3x ETF available publicly (e.g. UPRO) is 3x Daily. Am I understand correctly?
Thank you very much for a kind response
Look up volatility decay.
Imagine you buy a security at $1, and it falls 20% next day to $0.8, and rebounds 25% back to $1. Now imagine buying the same security but with 3x daily leverage at 1$. It would fall 60% the first day to $0.4, then it would rebound 75% to $0.7. As you can see, it doesn't end the same value as the initial value. The problem is that the amount of leverage is reset everyday, it doesn't stay constant. If it stayed constant, the results would be leveraged cumulative but it would pose a huge risk to the fund.
Thanks man. I think I I understand .
Bought 3x palantir stock but there’s share cost 3x more
DCA on TQQQ I don’t see technology slowing down any time soon…
:o first leverage sounded terrible, but leverage for treasury bonds sounds more attractive to me in this low-yield world. I'm going to research that a little more, after all, I was already considering high yield bond funds, so maybe something with the same amount of risk but with negative correlation to stocks could be very appealing for mid-term investments.
That's what missing in the US bubble. 3X leverage.
Thanks for the video! It was great.
Our pleasure!
How do these funds work when you buy their shares? Do they buy long / short sell sp500 stocks for you? What hapens when you sell a fund like that does the fund sells long positions / buys its shares and close short positions for you? What's happening behind the scenes? Do you have liquidity issue with the fund shares themselves or just have a short squeeze risk with the underlying assets? Thanks.
Thanks for your presentation
My pleasure
Thank you for everything you do very well appreciate it
You're welcome
How does say running a 2x levered ETF compared to a strategy of using Offset Mortgage (eg2% interest) to double you otherwise investments of free cash ?
This also enables you to invest via any of the available investment universe be that your favourite Funds, ETF’s, EFT’s or individual Stocks ?
Long term is good if you don’t start at a peak. I wouldn’t do an index right now.
Yup. I assume shorting would be much better option at this point. make sure have a tight SL.
The 3x S&P ones seem pretty good, maybe wait for a 30-50% market crash and average into to them depending on how big the crash is, only with a small allocation of a portfolio.
Is it true that wisdom s&p 500x3 is not covered by FSCA? . Is this true of all leveraged fund's? And why does the KID document recommend holding for only 1 day ??
I'm a little confused about long term holding
I think there's a large gap missing from this video: check indices which have only modestly increased or have been largely flat--the levered funds will underperform their non-levered counterparts.
Agreed. That's because of the higher management fees.
@@davidepinzan1268 And/or because of the volatility decay issue.
Great video thanks. Would be really interested to hear more on your "crash shopping list", might make for a good video.
Another excellent video Ramin! Please could you consider doing a video on so called, 'Equally Weighted' funds?
An excellent video, very informative from a person that been investing in leaveraged etf for over a decade quite successfully. I learnt alot. Mainly that I've been very lucky not to have been financially destroyed.
Glad it was helpful!
@@Pensioncraft it was very informative... and well researched. I will look at my portfolio far differently from now on and reduce my exposure to leveraged etfs, even though its done well so far..its basically been luck.
I think most people, myself included, would not be able to stomach a multi-year downturn with this much risk. Especially as their portfolio gets larger and the stakes are higher. I take some leverage on my house, with a 30yr fixed at 2.375% interest.
My friend is running at 2.5x leverage right now. I'm sure he's feeling smart as heck since he's getting mega returns but the moment the market plummets due to Delta or the middle east he's gonna be feeling like a real moron. The other thing people forget about leverage is you have to pay interest on that loaned money, which amplifies losses even more.
You don't pay interest if you don't invest on margin.
Note you can also get burned the other way, trying to time the crash.
No thanks, borrowing money to gamble with does not sound like a very good idea to me.
You don’t really mention the daily decay in leveraged etfs….they “reset” every dAy….inverse etfs are a good way to destroy value except for immediate drops….buying and holding is a fools game due to decay
As I understand it, the performance takes into account this daily reset. A 3x S&P500 would return approximately double the s&p given the daily reset, not return triple the s&p
Stop listening to idiots. Volatility decay is simply what happens to everything-takes a greater than 10% recovery to recover from a 10% drop. The fact is this- it works in reverse too. Look at returns of UPRO Vs VOO or TQQQ vs QQQ -over different time periods you will one or the other outperforming. Over longer time frames both UPRO and TQQQ do significantly better then 3x the underlying. Of course, if we go sideways for ages, the vol decay will eat away, and if you look carefully at charts you can see where (for eg) Qqq outperforms TQqq. Over time (as long as equities go up), then leverage wins.. I hold TMF and TQQQ long term.. Daily decay? Who cares? Look at charts. Hold these long enough and you can withstand the drawdowns and still be miles ahead. Its very hard to stick with-you will doubt your plan at least once a month.. Works though. Just don't go nuts and buy too much.
What about having a small Leveraged ETF position in a portfolio, say x2 S&P500
This guy forgetting mentions positive points which are 10 times greater than negative.
Leveraged funds only work in the short term (and good luck with winning that way).
False. This is a popular misconception. Look at the longer term returns for any of the levered long positions on the S&P500, Dow or Nasdaq. As long as the underlying has positive upwards trend with relatively low volatility, these products can work out over the long term
Spam.
exactly
@@AfrikaVentures
It sounds to me like most people would get better returns if they just buy a 3x leveraged S&P 500 ETF and lock their trading account password in a bank vault for 20-30 years.
Hi @Benjamin Bate I agree that might be a good strategy. But Michael made a good pointin our Many Happy Returns podcast which is that if there's a _really_ big drawdown the ETF could get closed as its value falls to almost zero. That would crystallize your loss. So you'd have to buy a new 3x levered fund as quickly as possible if that happened. many-happy-returns.captivate.fm/episode/leverage Thanks, Ramin.
@@PensioncraftThat should be easy enough, and you would have a huge tax loss harvesting too.
Haha... Literally posted as I was looking at my leveraged ETFs in my Roth IRA.
Leverage, the fastest way to burn all your savings!
Said by someone who probably holds huge leverage in their mortgage…?
Catchphrases like this are rarely useful and stop people really understanding the maths. Leverage can be a great tool!
...or to multiply them.
@@stevie3452 a mortgage?? lol
@@alfinal5787 yes, a mortgage is a tool to get leverage on your investment in a house
@@stevie3452 I mean I don’t have a mortgage in this real estate bubble. You should stop assuming everybody is dumber than you.
Well leverage is typically a bad idea, and overpriced art is typically a bad idea as an investment. You do the math there. Bad investment, plus bad loan, equals a REALLY bad time.
Very much like the fact you don't dismiss them outright as some do and mention that upon a market crash or correction these are certainly something to look at. For me subsequent to 2022 inflation/macro market crash, I made about a million dollars off a 200k investment into FNGU from January 2023 till now.