does it EVER make sense to buy and hold a 3X bull ETF ?
- Thread starter trc4949
- Start date
It's equivalent to Futures leveraged up 3 times, if and only if you buy at RTH close and sell the next day before RTH close.
i.e, The 'equivalence' only lasts one day.
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-- and your point is?
You don't understand leveraged ETFs if you think they're equivalent to futures. You continue to display that lack of understanding with every post.
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I see your points SIG; + Buy1Sell2, also.AS far,as waiting until i completely understand something, well i mainiy study trend$ + trade /invest sometimes.I found out even the guys @ power company do NOT really completely understand electricity but we don't sit in the dark till we do.
Frankly I'm glad i read-reread the 777+ page paper prospectus of FAZ-FAS; i used to worry [wrongly] about a 3X going to $0.00 in day LOL-LOL....... Possible , perhaps,but NOT likely @ all.
The Long Term Behaviour of Leveraged ETFs
There is a big myth about leveraged ETFs that has been recently propagated in the media. This article corrects the myth and explains the faulty reasoning that gave rise to it.
The myth is:
Leveraged ETFs are not suitable for long term buy and hold
This myth is expressed in various ways. Some quotes from the internet about leveraged ETFs:
“unsuitable for buy-and-hold investing,” “leveraged ETFs are bound to deteriorate,” “over time the compounding will kill,” “leveraged ETFs verge on insanity,” “levered ETFs are toxic,” “levered ETFs [are] a horrible idea,” “…practically guarantees losses,” “in the long run [investors] are almost sure to lose money,” “anyone holding these funds for the long term is an uneducated lame-brain.” “Warning: Leveraged and Inverse ETFs Kill Portfolios.”
There is even an article comparing these ETFs to swine flu.
These claims are not backed up with mathematics and data. This article rectifies that deficiency and finds that the claims are false.
Exactly. Your posts imply they are equivalent to futures for a "hold" scenario when that couldn't be further from the truth. You may or may not understand how they work, but at this point your posts are just spreading confusion and misinformation, that's all of our collective points. If you want to correct those misconseptions by explaining to us all the path dependency inherent in the daily rebalance of leveraged ETFs we'll all change our opinion of your knowledge level and value to the thread. Until then you're creating negative value with your posts.