/biz/ - Business & Finance

PUSH IT

>>17481899
>I guess the cost of the leverage is the higher fee
The fees are higher but then again margin is literally a loan and there is usually some interest so it's to be expected. The question is can you make more money than you're paying interest. I would content in this scenario you can make much much more.
>the fact you're also betting on low daily volatility in addition longing the index
Consider SOXL which is possibly the highest performing leveraged ETF to date. In the first 3 years of its existence it crabbed up and down with huge volatility. It would go up and down 70% sometimes. Yet in the same time frame to date it has outperformed SPY 30x compared to 2x (pic related). Volatility is why you don't hold leveraged commodity ETFs, for index based ones it is a meme.
>If the market really did jump straight up and down daily, weekly, etc then the leveraged index would indeed fail to track and investors would be fucked, that just hasn't happened amirite
Yeah, and like anything else a scenario can always be contrived where the investment doesn't work. The whole "stock market could go to zero tomorrow" argument. The worst we have are the GFC and the depression and leveraged ETFs have been backtested through both of them and everything in between, yet the print money
>maybe i am a gay male who knows
show benis

>>17420693
>you must be veeeery careful trading 3x leveraged ETFs short term they are only good for long trending market
We all take our chances but consider this. For the first 3 years of SOXL's existence it crabbed with multiple drops exceeding 70% yet pic related. I've read every argument under the sun regarding the nature of leveraged ETFs, read several prospectuses, did plenty of math and backtesting of real and simulated leveraged instruments over many decades so I understand the risks fully. When it's over I guess we'll see who's right. Either way I'll be here posting my gains or my losses however it goes. Note too that I have orders of magnitude more money than in that shrimpy little buy I posted which is part of my strategy here. As the price gets better and better I will buy more and more (yeah averaging down "OOOHHHHHH NO NO NONONO" amiright. We'll see how it goes.

>b-but muh volatility decay
>h-how could a leveraged ETF have 15x the returns of the unleveraged golden son SPY despite trading sideways the first 3 years of its existence? H-how could this ever happen? Pl-plebbit told me leveraged ETFs were guaranteed to go to zero