SC nice post. I have been burned by 3x to many times to count. I have seen the best post about leveraged ETF's by the people that have been hurt by them the most.
SC – yes, unfortunately, I have become aware of my own folly over the past few months. Even when we have a flat day I lose money. Leveraged ETFs are not to hold. But at this point, I am holding for another week! Even if we drop 100 points on the S&P, I don't think I will break even. Sad but true.
You really cannot hold leveraged ETFs over time. Remember the FAZ when it was at $55 presplit? It is $1.45 presplit now. The chance of recouping that, is ZERO. I bought those at $5 (presplit). I was very proud that I got in after it has dropped 95% and bravely announced that I would double up if it got to $2 (presplit). Well it is at $1.45 (presplit now). FAZ will not recoup the losses incurred by those who bought it at $85-$55(presplit) all the way down. Not in their lifetime. Even my original $5 presplit would take a series of mega turn of calamity to recoup. (P.S. I didnt hold nor added to it. Puked them all out just in time for the July 09 ''To Da Moon” blast off. Pure luck to have puked those BEFORE the blast off. It was someonelse's work that got me to sell. My own work would have gotten me out days later, with some losses for sure.)
If you hold 3x etfs, by the time P3 comes, you would make 200% of the etfs. But it is 200% of an ETF that may have already lost 90%-99% of your original investment. You would need several P3 just to breakeven.
You can buy and hold a stock as the stock has an underlying business entity, which unless going bankrupt, has intrinsic value. The thriving business will bail out the stocks over time. 3x ETFs are lottery tickets. The money lost is gone forever. In stocks, barring bankruptcy, losses are just paper loss. But that is not the case with leveraged instruments.
Leveraged instruments are for very precise timing. They are for short term tactical move. They are not for attrition warfare against the market.
Not saying this to make anyone feel bad. Just hope that someone would learn something useful and this may spare some misery.
So why hold any longer? Like you asked me this morning why did I sell?
SC nice post. I have been burned by 3x to many times to count. I have seen the best post about leveraged ETF's by the people that have been hurt by them the most.
SC – yes, unfortunately, I have become aware of my own folly over the past few months. Even when we have a flat day I lose money. Leveraged ETFs are not to hold. But at this point, I am holding for another week! Even if we drop 100 points on the S&P, I don't think I will break even. Sad but true.
You really cannot hold leveraged ETFs over time. Remember the FAZ when it was at $55 presplit? It is $1.45 presplit now. The chance of recouping that, is ZERO. I bought those at $5 (presplit). I was very proud that I got in after it has dropped 95% and bravely announced that I would double up if it got to $2 (presplit). Well it is at $1.45 (presplit now). FAZ will not recoup the losses incurred by those who bought it at $85-$55(presplit) all the way down. Not in their lifetime. Even my original $5 presplit would take a series of mega turn of calamity to recoup. (P.S. I didnt hold nor added to it. Puked them all out just in time for the July 09 ''To Da Moon” blast off. Pure luck to have puked those BEFORE the blast off. It was someonelse's work that got me to sell. My own work would have gotten me out days later, with some losses for sure.)
If you hold 3x etfs, by the time P3 comes, you would make 200% of the etfs. But it is 200% of an ETF that may have already lost 90%-99% of your original investment. You would need several P3 just to breakeven.
You can buy and hold a stock as the stock has an underlying business entity, which unless going bankrupt, has intrinsic value. The thriving business will bail out the stocks over time. 3x ETFs are lottery tickets. The money lost is gone forever. In stocks, barring bankruptcy, losses are just paper loss. But that is not the case with leveraged instruments.
Leveraged instruments are for very precise timing. They are for short term tactical move. They are not for attrition warfare against the market.
Not saying this to make anyone feel bad. Just hope that someone would learn something useful and this may spare some misery.
And that is why I have been holding for months 🙁 Hopefully one day I will make my money back 🙂
Well, i have been holding it for months now, imagine how I feel!
LOL.. U is awesome. If this gig doesnt work, you will do well as a comedian.
Thanks for the explanation SC and thanks for the info Sun.
5-10% is bad enough if your options are on the wrong side. lol
As is, that is 50-100 es points. I wouldnt mind bagging those. No sir, not at all. In fact I would give thanks to Allah, Jesus, Buddha and Odin.
I agree with you. None of the corrections have been that great in the last year. 5-10%. Then right back up.