/biz/ - Business & Finance

Expanding on the post from yesterday and pic related.
>Portfolio 1: 100% SPY
>Portfolio 2: 50% SSO + 50% SDS
>Portfolio 3: 50% UPRO + 50% SPXU

Some things which are interesting
>This only works WITHOUT rebalancing.
This is because the winning arm of the bet goes exponential and the losing arm of the bet goes to zero. If you rebalance, you are continually putting money into an asset trending to zero.
>Portfolios 2 & 3 perform exactly the same if the performance of the S&P500 is completely inverted.
In the case where the S&P is trending downwards, UPRO will go to zero and SPXU will go exponential.
>It's essentially like buying a long straddle option.
Where the TER is the cost.
You make money as long as the price is sufficiently different from what it was when you purchased it (fast enough to overcome fees).

>>56935386
>>56935413
Get your head around this one!
>Portfolio 1: 100% SPY
>Portfolio 2: 50% SSO, 50% SDS
>Portfolio 3: 50% UPRO, 50% SPXU