| I know a 3x leveraged fund does not behave as idealized, when you really cash out you won't really get 3x the rate of return. It would be insane to put 100% of your portfolio in such a fund, it is more like it to allocate 30% of your portfolio to that, and the rest to something safe or at nest decorrelated from the stock market, say 30% in Lending Club, 15% in gold, 10% in bank CD, etc... If the market has an awful day a triple-levered fund can take a much worse hit than expected, particularly if the market "sizes up" like it did for Gamestop. I'd think a levered fund for the S&P500 or NASDAQ work be pretty safe but anything more granular is getting risky. Note also that if the market goes against you in the short term the ETF may go out of business and hand you the cash at the worst possible time which you might reinvest properly but you might not. It is really fun to invest in a dangerous ETF or ETN with some "Mad Money" (like it is fun to bet on the horses) but if you are interested in that kind of "leveraging" you should understand Stock Options enough to understand how you can accomplish the same thing with as the 3x ETF with a program of trading of SP&500 options -- in that case you may be able to "keep on keeping on" through the dip and make huge profits in the end. Or maybe you give up out of despair or are forced to give up by your creditors. Great hedgie and social-democrat economist J. M. Keanes said "the market can remain irrational for longer than you can remain solvent" and you can face the squeeze yourself with options, short selling and similar tools. |