Ricard

Why You Need to Be Careful With Leveraged ETFs

I've been looking into purchasing TBT, the ultrashort 20+ year treasury vehicle as an inflation hedge. After reading this, I've decided to stick to TIPS or something safer, but not for the reason you posited. The phenomenon you stated could easily apply to a doubling of your stock position, short or long, and is simple mathematics. I believe the price differentials are more due to the time value lost in the derivatives inherit in these ultra-shorts than just the fact that you're on the bottom end of the trade.

So, thank you for going through the laborious process of tracking performance; you've given me the answer to my last lingering question, which was exactly what kind of performance could I expect.