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Nothing wrong with leveraged ETFs in principle. It's just another, slightly sub-linear, point on the risk/reward spectrum (ie. 2x/3x extra risk for slightly le

• adrr 9y ago
  It isn't myth. Prospectus of these leveraged ETFs say don't hold these instruments over a day. This is from JNUG which is popular with millennials: "Because of daily rebalancing and the compounding of each day’s return over time, the return of the Fund for periods longer than a single day will be the result of each day’s returns compounded over the period, which will very likely differ from 300% of the return of the Index over the same period. The Fund will lose money if the Index performance is flat over time, and as a result of daily rebalancing, the Index’s volatility and the effects of compounding, it is even possible that the Fund will lose money over time while the Index's performance increases."
  • lodi 9y ago
    Understood. But please read the whole link; you don't take a long position in any etf, geared or not, if you're expecting the underlying index to give negative or neutral returns. The whole point of the market is to grow--which is does "most of the time". (Caveat emptor, yadda yadda.)