It seems the main reason that leveraged ETFs generally aren’t amazing investment vehicles is that they reset their leverage every day, causing the effect where volatility in the stock market is painful for LETFs even though it may be trading sideways or even upwards for normal ETFs.
Could this problem be removed by leveraging yourself to buy into SPX, or would the fees associated with taking on that debt cancel out any extra gains?
Of course there is also the problem that, if you’re 3x levered, and the stock market dropped 40% (keep in mind that would only be to 2600, or early 2019 levels, you wouod be completely wiped out and margin called.
Submitted July 16, 2021 at 05:27AM by hatetheproject https://ift.tt/3z7DU3o
