Why leveraged ETF’s suck for long term investing.
I’ve seen some dangerous comments about the benefits of buying long term options on leveraged etf’s.
Or just holding them as an investment...
Sequence Risk. If the market rises 10% The 3x ETF goes from 10-13. (A 30% return).
If the market then goes back down 10% to where it started, the ETF goes down 30% it goes to (70% of $13) = $9.10...
So the market has gone nowhere ... you have lost 10%.
Couple that with higher expenses versus regular ETF’s, and that these things continually reverse split,
UVXY has lost $41,000,000 a share....see UVXY price in 2011 versus today...$41,000,000... WTF??? https://m.splithistory.com/uvxy/
Stick with calls and puts on the SPY or do Diagonal weighted calendars....
My 2c Dash UVXY price in 2011
Submitted January 27, 2018 at 12:02PM by Dashover http://ift.tt/2EbQdR3
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