Number, it is a good presentation however there are some points that I would take issue with. His explain of compounding with regards to fund exposure and fund leverage is incorrect. ETFs do not have variable increasing leverage per their prospectus and the compounding impacts both the cash/stocks as well as the debt borrowed - its just wrong. https://admin.na3.acrobat.com/_a763721471/p66106380/ 23 minutes through about 30 minutes is where I take issue with.
do these nuances regarding tracking errors,etc. occur with UNLEVERAGED short etfs?? Say for example, instead of buying SDS, I would buy SH. Could the second etf be a buy and hold (ie. an exact opposite mirror image of the SP500)?? Thanks in advance.
These are obviously wrought with danger. But they are fun to trade. Where else can you get such intraday volitivity.
c.chugani, Sorry to not have replied sooner. You will find that the leveraged products are much more susceptible to compounding and tracking errors because they hold derivatives to employ the leverage. Iâm not licensed or registered so Iâm apprehensive to recommend an investment product⦠that said, I think that buying and holding a non-leveraged ETF is just like going out and buying up a basket of stocks or an index. If you want to bet against the S&P short term Iâd use something leveraged as long as you know the risk â if you want to bet against the S&P long term (12 months for example) Iâd use something with either low or no leverage. Not knowing what type of investor you are and how your portfolio is laid out makes it hard/impossible to give an answer over the internet. Are you trying to use this as an investment strategy or do you consider this a trade?
If I were you I would just short the SPY for now, until you investigate it more. I tried the short ETF once but for a short term trade. Because I'm a position trader - these tracking errors do concern me a bit.
Perhaps you should be a tad more low key marketing your firm's ETF's on the internet? Your advice on 3X leveraged ETF's is certainly appreciated on here, but be careful of your approach. el pollo