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 Strategies & Market Trends : CEF and ETF

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To: Julius Wong who wrote (993)6/9/2009 6:25:09 PM
From: Biomaven of 1326
 
Of course exactly the same argument (without the magnification) holds for stocks - if they go up by exactly 5% and then down by exactly 5% you lose out. It's just a function of the way percentages work (1.05*.95 does not equal 1).

I think the real issue is that these leveraged ETF's are inherently inefficient (hedging or leverage costs, transaction costs, management costs, non-optimal strategies to produce leverage). If I could short the lot of them I would. (If anyone finds any that are shortable, let us know).

Peter
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