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This. I was going to write a comment but you nailed every point. These are not "leveraged" ETFs in any sense of the word. These are vehicles designed by savvy b

This. I was going to write a comment but you nailed every point. These are not "leveraged" ETFs in any sense of the word. These are vehicles designed by savvy bank trading desks to drain noobs of their money. One way to think of them is casino bets with very high carry costs. Hold them long enough and you will give back gains and most of your capital to the house. I admire the article writer's effort but he seems to lack a working understanding of leveraged ETFs and how they are constructed.

smabie 7y ago
> Hold them long enough and you will give back gains and most of your capital to the house. How, why? Everyone says this (which is why I wrote my post), but no one has actually explained it to me. A leveraged SPY ETF does not have a high carry cost. Sure, if there's an ETF that's buying long-dated contango futures, then yeah, you're going to lose money in most environments (TVIX, etc). But leveraged equity ETFs do not have this property. Moreover, if you really think that most of your money is going to go to the house with any of these products, surely you should just be able to short all of them and make a risk-free profit, right?
- haltingproblem 7y ago
  I know I have learned a ton from HN comments. They are a goldmine of information and people willing to explain and mostly engage in educational respectful discourse. I don't think anyone here will have a problem explaining the mechanics to you if you politely asked or were open to it. Your tone comes off as extremely aggressive and defensive to boot. Statements like - "what exactly is your problem" does not engender mutually beneficial back and forth. It takes time to craft a correct and well-researched response. It is not incumbent on me to correct your misunderstandings. I might consider volunteering my time if you presented a minimal facade of civility and gratitude. You have shown none of these.

smabie 7y ago

> Hold them long enough and you will give back gains and most of your capital to the house. How, why? Everyone says this (which is why I wrote my post), but no one has actually explained it to me. A leveraged SPY ETF does not have a high carry cost. Sure, if there's an ETF that's buying long-dated contango futures, then yeah, you're going to lose money in most environments (TVIX, etc). But leveraged equity ETFs do not have this property. Moreover, if you really think that most of your money is going to go to the house with any of these products, surely you should just be able to short all of them and make a risk-free profit, right?

haltingproblem 7y ago
I know I have learned a ton from HN comments. They are a goldmine of information and people willing to explain and mostly engage in educational respectful discourse. I don't think anyone here will have a problem explaining the mechanics to you if you politely asked or were open to it. Your tone comes off as extremely aggressive and defensive to boot. Statements like - "what exactly is your problem" does not engender mutually beneficial back and forth. It takes time to craft a correct and well-researched response. It is not incumbent on me to correct your misunderstandings. I might consider volunteering my time if you presented a minimal facade of civility and gratitude. You have shown none of these.