Leveraged ETF

>>1589481
Wot

Just calculate your how much it will cost you to repay your loan vs the performance gain of the non leveraged ETF compared to the 2X, my guess is they wouldn't be far off if you take into account that you have actually borrowed money which you have to return

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>>1589481
some of the leveraged etf's have compouninding daily returns. surely you can understand the fiduciary benifit of that.

along with the mitigated risk of the abscence of margins calls, aligned with the fact that some of them are trading risky futures underneath while sheilding you from the risk.

>>1589503
>Just calculate your how much it will cost you to repay your loan vs the performance gain of the non leveraged ETF compared to the 2X, my guess is they wouldn't be far off if you take into account that you have actually borrowed money which you have to return

I just feel really terrible about the idea that if the fund goes 100, +10 (110), -10 (100); I don't have 100 but in fact 98 because I lost more money on the -10 than I gained on the +10.

But I guess if I borrowed money to do the same, I would also be out interest so maybe it's a wash.

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>>1589481
http://www.proshares.com/funds/performance/the_universal_effects_of_compounding.html

>>1589514
>maybe it's a wash

It depends on the time scale. Let's not forget you have to pay interest on margin. Generally when comparing leveraged beta slip of an etf to margin interest their is a break point. Exactally where that point is a matter of the specific etfs fee structure and performance. Generally the leveraged etf is cheaper to hold for short periods of time, and margin is more cost effective for longer holding periods. Leveraged Etfs come right out and tell you this. They generally beg you not to hold them longer than a day. I think that's mostly cya.

>>1589481
First reason: it it's the fund that's leveraged rather than you, you can't end up in negative equity if it collapses.

Second reason: the fund can probably borrow money more cheaply than you can,

>>1589656
/thread

>>1589481
Your daily return/loss is the same, assuming the ETF is leveraged well. But you can be underwater with the borrowing, and that is not the case with the ETF unless you have other debt.

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>>1589529
I've actually been curious. One time as a personal exercise I took a weeks worth of DRIP data when it was increasing, took the final price level at the end of the week, and ran each percentage increase from each day in reverse (took the closing of the final day and compound decreased it by each days original increase). As expected, the ETF closing price at the "beginning of the week" ended up being quite a bit lower than the original closing at the beginning of the week. I'm looking for more resources that discuss strategies for purchasing ETF's, and particularly how you can get burned by not foreseeing the effects of compound returns/losses. Can anyone recommend a good book/resource?