[ZephyrBlu]

I was hoping for more DS related stuff. It almost sounds like you're learning to be a SWE!

The investing section is curious.

> On brilliant advice from the man who arguably went from mere millions to decabillions faster than anyone in modern history, I've put a large chunk of my money in leveraged index funds and etfs

Who are you referencing here and did you do any DD other than taking his advice?

I'm wondering what the downsides of leveraged index funds and ETFs are since I'm not sure how they work.

[dawndrain]

> did you do any DD other than taking his advice?

I did some backtesting simulations that made leveraged investing look pretty awesome. The effective borrow rate for funds like spxl is crazy low, way better than if I were to borrow myself. (Also, fwiw I was pretty conservative and am overall only around 2x-leveraged.)

The internet is very opposed to leveraged investing imo, but I think most of the concerns are pretty dumb. There was this one blog post where this guy ran ten simulations of his own, most of which showed the leveraged portfolio doing comparably to the baseline, but one a couple showed it doing worse and one saw the leveraged portfolio 100x'ing or something... and he concluded that it wasn't worth it??

People will also appeal to volatility drag as a superficially sophisticated knockdown (in short, imagine all four two-step paths in which the market goes up or down by 10% at each step. Then the baseline market averages out to (.81 + .99 + .99 + 1.21)/4 = 1, and a 3x leveraged portfolio averages out to (.49 + .91 + .91 + 1.69)/4 = 1. Volatility drag is those two middle worlds where the leveraged portfolio does badly despite the market as a whole basically ending up where it started.

[ZephyrBlu]

Thanks for you perspective. I'm considering using leverage so it's interesting to hear from people who are currently using it.

Also, you might find this tweet and paper interesting:

- Tweet: https://twitter.com/patio11/status/1432891941138563077

- Paper: https://citeseerx.ist.psu.edu/viewdoc/download?doi=10.1.1.89...

[akg_67]

Use keyword “HedgeFundie” (username that first started the discussion on Bogleheads and now most refer this strategy with his name) to search discussions about Leveraged ETFs on Bogleheads forum and Reddit. There are over 300+ pages worth of discussion on this topic only on Bogleheads.

Also checkout information about permanent portfolio put forward by Bridgewater Associates.

[dawndrain]

> I was hoping for more DS related stuff. It almost sounds like you're learning to be a SWE!

It kind of felt that way too :). Some more data sciency things were learning how transformers work, hacking pytorch, using visualization tools like tensorboard and wandb, web scraping, better using parallelism, tuning hyperparameters (mostly the learning rate tbh), better fluency with the command line than I assume most swe's need, getting very comfortable inspecting data, making experiments more reproducible, reading lots of papers, writing papers, and trying (somewhat half-heartedly) to get published.

[kbenson]

Almost definitely Warren Buffett, who went so far as to make a very public bet that index funds performed better than hedge funds (and thus most active investing). You can see details on the deal and outcome here https://www.investopedia.com/articles/investing/030916/buffe...

Also, he's got tens of billions.

Edit: Or maybe not on reflection about the "faster than anyone" bit. I dunno.

[comp_throw7]

Sam Bankman-Fried, unless I miss my guess.

[systemsignal]

yeah think that's right, esp considering their background at FTX

[krrrh]

The leverage means they go up faster, but they also go down faster.

In regular investing you feel good when you get a modest return, and bad when you experience a modest loss. With leveraged funds you feel like a genius when the market goes up and like a complete moron when you get wiped out.

[ZephyrBlu]

I understand how leverage works, just not in the context of an index fund or ETF.

From your description it sounds like the leverage is baked into it, so it's kind of like "safe" leverage in that you can't lose more than you have.

[krrrh]

This link explains it pretty well. There are other advantages from regular forms of margin too.

https://www.investopedia.com/terms/l/leveraged-etf.asp