Why Leveraged ETFs Are Bound to Deteriorate
After reading a lot of blog posts, tweets on twitter, Facebook comments, and emails, I decided it was time to figure out the real decay behind the leveraged ETF's, both long and short. As I wrote about this in one of my previous blog posts, I wanted to revisit this issue of the double and triple leveraged ETF's, and why investor's should stay away from them, and to clear up some confusion. With the popularity of ETF's came these funds which use 200% and 300% leverage. Yes in any steady trend they can grow like weeds, but in a correction they will give back much of their gains. This is simple, and basic math.
First of all, these are extremely risky, and investor's shouldn't hold on to any leveraged ETF(s) for the "long run", they are almost sure to lose money. These instruments are ideal for traders not investors! http://optionmaestro.blogspot.com
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