T.Carbello

Using ETFs to Beat the Market with Lower Risk

Mr. Nasserdeen was a professor of mine. This is a limited posting on a longer article he wrote in the past so the context may be understandably misunderstood.

The relevance of the article is in showing the 'theoretical' benefit of using a leveraged ETF while systematically limiting risk. A strategy you could add on to any preexisting strategies you trade by.

The prominent message is the use of risk management not the relative performance of a leverage ETF.

The S&P and the correlated SSO are simply used as generic examples for relation. SSO presents itself as a double S&P and therefor is presented as such by the author.

If the correlation is less than such then simply shifting principal weights from 50/50 to 60/40 or the like, depending on your tolerance, solves any disputes.

I have used this strategy in the past. It is an alpha primary strategy and is very efficient if used correctly. While 'Jimmy F' is correct in stating that some market timing is involved it is usually assessed quarter to quarter....anything shorter was simply a result of being stopped out.

Using ETFs to Beat the Market with Lower Risk

I think the article is gauged, as mentioned, toward the theory of a strategy for non traders and not a correlation of the etfs and indexes.