Finally, leveraged ETFs are preferable to margin, for long term?

Quote from crgarcia:
Leveraged ETFs have no time decay.
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They must have, otherwise the product could not be financed.

The issuer of such an instrument can use options or futures/stock to manage it. The expected value of the financing costs when using futures/stock is equal to the cost of time decay of the options necessary to have the same effect.

So a long/short ETF has a lower/higher value over time than you would expect from the multiplier.
 
The potential of decay in a position is worse than theta decay on a long options position. Never underestimate the compounding risk in these ETFs. It will eat one alive!
 
That must then be the issuer who takes the money he thinks he deserves. Probably there are methods to to this other than from the advertised costs...
 
Quote from crgarcia:

If FAS went down 70%; in order to recover if needs to go up not 70%, but 333%!

As leveraged ETFs sell assets during downturns, they have too weak a base to recover.

So, it's needed to average-down somewhat with lever'd ETFs.
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Lol, do you realize you could say about any instrument where you're not using margin? "All you need to do is (keep) averaging down (with unlimited funds) somewhat" to make money.

You can turn a long position initiated at the height of the internet bubble, now a penny stock, into a winner with the proper amount of unmargined funds. Is this basically the premise of this thread?
 
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