19709

Why Leveraged ETFs Are Bound to Deteriorate

You obviously did not read the article closely enough. The author was saying that if the index fell to 900 and the 3X fell to 700 an 11.11% increase in the index back to 1000 would not be sufficient to return to 3X to 1000. It would take an increase of 14.283% in the index equivalent to an increase in the 3X of 42.85% to return the 3X to 1000. While your math is OK, your reading comprehension is not.


On Jul 15 08:58 PM mwfall wrote:

> THE AUTHOR IS 100% WRONG. HIS ARTICLE IS WORTHLESS AND HE'S A MATH
> DUNCE.
>
> HERE'S HIS MISTAKE:
>
> take the triple levereged one.
> when it goes from 100 to 70 the percentage loss is calculated by
> dividing 30 into 100 equals 30% (he was right on that one)
> when it goes from 70 to 100 the percentage gain is calculated by
> dividing 30 into 70 equals 42.85% gain !!

Why the Dow Is Headed to 6000

Well stated for as you obviously understand, the consumer as an investor is almost always wrong. Better to adopt the contrarian approach as you advocate.


On Jul 01 05:06 PM WarrenTeeSmith wrote:

> Very interesting article. I am very much encouraged by all of the
> followers, who are at least as negative towards the market as the
> writer of the article. I have no idea where the market will be six
> months or a year from now. I could almost care less, if the market
> as a whole declines another 1,000 or 2,000 points. I am fairly certain,
> that the next 6,000 point move on the Dow, or the next six hundred
> point move on the S & P, will be up and not down. In the mean
> time, I will continue to buy good companies with good management,
> and hold them for the longer term. I will enjoy didvidend yields,
> far in excess of what a 5 year treasury is yielding. Maybe in 5 or
> 10 years I will look back and say you folks were right, I could have
> waited for the market to drop another 1,000-2,000 points or so. And
> if it does, I will step in and scoop up a whole bunch more. I personally,
> have never been great at predicting market direction over the short
> term. Finding great companies, with good balance sheets, and good
> management, at an attractive price....those are things I have been
> able to do well, and has paid me on average, about 13% a year, compounded
> over the last forty years. So, I'm not going to fret about a few
> thousand points at this stage of the game. It's when the writer of
> this article, and his followers, starts turning bullish, and starts
> calling for 20,000 on the Dow, that I might take pause, and allow
> some of you nice folks to buy some shares from me.
>
>