Quote:
Originally Posted by 6miths
My recollection and reading on these funds was that stated by others. They are meant to be short term (hours/days) vehicles only and do not perform as expected in the longer term (weeks/months/years).
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The leverage ratio of 2x and 3x can persist for longer periods in a bull market, meaning months or a year. That's why these leveraged funds can be quite seductive.
Just buy when the market goes up, and sell before it goes down, and you are all set.
Quote:
Originally Posted by GravitySucks
Why not borrow enough money and buying twice as much of the underlying index and save the management fee?
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You will have to pay the loan interest, and may face margin calls.
The dividend of the stocks bought with the loan will pay for the loan interest. And there is no risk of margin call in a bull market.
So, just don't do this when the market goes down. If it only goes up, you can do all sort of stuff to make money.
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