Need help understanding leveraged ETF's

Don't get me wrong. Leveraged ETFs are a great way to surf a bull market, but they're meant for institutional hedge funds where a 5% daily movement can mean tens of millions in profit from the sheer volume of capital alone. We don't have that kind of capital and insider information to maximize gains. That doesn't mean the average guy can't make some money from them. Don't let greed blind you and stay in too long. Never get into something without knowing the risks.

If you're the type to buy and hold for the long term, this isn't the type of investment for you. Holding for short to medium term is okay (weeks to six months) as long as you have a clear exit price point or date. I'm gonna bail out of as soon as earning season is done by June.

But wouldnt the sharks that eat us up long term eat us up short term as well? You listed their advantages. Don't they apply to both short and long term?

And yeah, this is risky as shit. lol.

That is what I have been saying about Bitcoin. I am sure you have watched Shark Tank. O Leary is a greedy fuck but not too greedy. Greed is actually bad. He preaches that and I believe it is good advice. A person who bought bitcoin at 10 grand and wont sell at 20 is being fucking greedy. I would be more than happy with that return. But it wasn't enough for them. Now they are back to 10k. And still think it will get back to 20k or hundreds of thousands. That is greed.

You are talking about 5% a day for these hedgefunds. That is big money even in my portfolio. I would kill for 5% consistently.
 
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But wouldnt the sharks that eat us up long term eat us up short term as well? You listed their advantages. Don't they apply to both short and long term?

And yeah, this is risky as shit. lol.

That is what I have been saying about Bitcoin. I am sure you have watched Shark Tank. O Leary is a greedy fuck but not too greedy. Greed is actually bad. He preaches that and I believe it is good advice. A person who bought bitcoin at 10 grand and wont sell at 20 is being fucking greedy. I would be more than happy with that return. But it wasn't enough for them. Now they are back to 10k. And still think it will get back to 20k or hundreds of thousands. That is greed.

You are talking about 5% a day for these hedgefunds. That is big money even in my portfolio. I would kill for 5% consistently.
The thing is that S&P 500 has delivered about 9.8% return annually on average even if you take the major crashes into consideration. When the market is on the upswing, leveraged ETFs can work in your favor to maximize profit. Direxion's SPXL, which mirrors the S&P 500, rose approximately 65% in 2017, compared to 20% from the regular index. If you had invested in SOXL at the end of 2016, you'd gained about 170% from your investment by December 2017.

With that said, you're exposing yourself to a shit ton of risk. If you remain exposed for too long, you're going to get a beating. Nothing hurts your portfolio more than leveraged ETFs in corrections (-10%) or bear market (-20%). If you had these investments back in 2008, you're looking at single digit net worth by 2010. When you buy these investments, it's almost like going to the casino.
 
The thing is that S&P 500 has delivered about 9.8% return annually on average even if you take the major crashes into consideration. When the market is on the upswing, leveraged ETFs can work in your favor to maximize profit. Direxion's SPXL, which mirrors the S&P 500, rose approximately 65% in 2017, compared to 20% from the regular index. If you had invested in SOXL at the end of 2016, you'd gained about 170% from your investment by December 2017.

With that said, you're exposing yourself to a shit ton of risk. If you remain exposed for too long, you're going to get a beating. Nothing hurts your portfolio more than leveraged ETFs in corrections (-10%) or bear market (-20%). If you had these investments back in 2008, you're looking at single digit net worth by 2010. When you buy these investments, it's almost like going to the casino.

Yeah, exactly. a leveraged s and p etf would have made you a fortune this year. But this was an exceptional year. S and P was up over 20% so a 65% return is expected. 3 times the S and P.

I would personally rather stick with something like VOO.

Because what you are doing is not only speculating, it is speculating times 3.
 
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why not just buy an individual stock if you're gonna gamble.. plenty of good tech stocks are producing those type of returns without the risk of leveraged ETFs

just buy AMZN, NVDA or BABA
 
I actually bought some. They have bearish ones too. I am betting against biotech. lol. It basically allows you to short a sector.

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The investment seeks daily investment results, before fees and expenses, of 300% of the inverse of the daily performance of the S&P Biotechnology Select Industry Index. The fund, under normal circumstances, invests in swap agreements, futures contracts, short positions or other financial instruments that, in combination, provide inverse (opposite) or short leveraged exposure to the index equal to at least 80% of the fund's net assets (plus borrowing for investment purposes). The index is designed to measure the performance of the biotechnology sub-industry based on the Global Industry Classification Standards ("GICS").
 
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