Texas is famous for its tradition of risk-taking. Everything is bigger and bolder here. When Jerry Jones makes the commute from his house in Highland Park to AT&T Stadium to watch the Cowboys play, he doesn't take a car or a limo. He takes his helicopter. That's the Texas way.
I don't know if Jerry Jones likes to trade stocks or not, but I have found an intriguing strategy with a lot of alpha and a commensurate level of risk. If you have some money to play with and you're looking for the ultimate long and leveraged trade, I think I've found it. Try to read this article with an open mind and decide for yourself!
Laying the groundwork
Leveraged ETFs are vilified by the media for being instruments of massive wealth destruction. I've been a critic of leveraged ETFs in the past for many of the same reasons that the media at large has been critical.
The most popular warning tossed around in the media is that by doubling or tripling the daily return of the index (leveraged ETFs rebalance daily), you inevitably lose money to slippage/volatility drag.
For example, if one day the index goes down 10 percent and goes up 10 percent the next day, you haven't made your money back. Instead, for every 100 dollars you invested, you would lose 10 dollars the first day and make back 9 the second day. If you leveraged 3x the daily return, you would theoretically be down 30 percent on the first day and only up 21 percent the second day.
The media isn't entirely off-base with their criticism of leveraged products.
There are a lot of rigged products in the leveraged ETF space (everything tied to commodities, volatility products or short an index is inherently rigged against you), so you have
