My recent book "Value in Volatility" is a practitioner's guide to the mathematics of leveraged ETFs, ...More the price action of which is a generalization of 'standard' stocks/ETFs. As such, it is also a guide to the math of market assets in general. The earlier "Leveraged ETFs" is a comprehensive exposition on the mathematics of this misunderstood class of financial instruments.
- Description: Occasional Investor. Trading frequency: Infrequent
- Interests: Commodities, ETFs, Forex, Gold, Options, Stocks - long, Stocks - short
For three decades since the early 1980s, two macroeconomic shifts have supported the buy & hold returns of equity investors.
• Interest rates have decreased, the 10-year rate from a record high of 15% to a record low of 1.5%.
These record-setting trends, and their part in driving equity values higher over the past 3 decades, should not be expected to continue. Even if the factors were to level off and hold steady, the beneficial trend will have been broken. And if these trends reverse...
Going forward, investors will need to earn returns from strategic investing; literally, buy low and sell high. Every investment strategy requires some understanding of financial math, and the returns of leveraged ETFs represent just the right generalization of single-name stock price evolution such that understanding them engenders a fundamental understanding of market assets.
Take for example the oft-repeated adage about volatility being a drag on returns: readers of Value in Volatility will not only know it is false but will be wise to the flaw in the thinking (and math) of those who believe it. A straightforward review of all necessary math is included. Clear examples related to markets and formulas easily implemented in spreadsheet software will help independent investors and finance professionals assess risk/reward objectively (and not just for leveraged holdings).
Investors must be mindful now more than ever: "Past performance does not guarantee future results." Value in Volatility provides the knowledge and tools necessary to respond.
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