Dan Weiss

Had Enough Volatility Yet? Direxion Set To Launch 3X Leveraged ETFs

These are very interesting for short-term moves but the problem is in the math for longer term. As an example lets say over a week the returns of an index are 2%, 3%, -3%, 1%, -4%: in this case the index would be down 1.2% but a triple etf would be down 4.7% (nearly 4x the amount due to the daily rule), meanwhile the triple inverse ETF would only be up by 1.3%. This may be a extreme example but it shows some of the danger of investing in the leveraged ETF's if markets are not heavily trending.