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My apologies. You're totally right, dang. Thanks for keeping this site civil and all the other work done for HN.
by qwrusz 10y ago
My apologies. You're totally right, dang. Thanks for keeping this site civil and all the other work done for HN.
- FabHK 10y agoJust wanted to add that Dave's notion is not quite as absurd as you make it out to be. As you might know, daily rebalancing leveraged ETFs (say, 2x or 3x) are basically a bad idea for long-term investments, because they are (simplistically) short vol. So, they might outperform the (non-leveraged) index/ETF if vol is low and total return over the period is high. But typically, with normal or high vol, or over long periods, they underperform non-leveraged. By analogy, a less-than fully invested ETF/trading strategy that's basically "0.7x" leveraged will beat the (non-leveraged) index/ETF in certain trading regimes (where total return over a period is negative or modestly positive, while vol relatively high).