Leveraged ETF’s Not For Us

We applaud many new investment products, still under review by our firm see post http://street-cents.com/2009/02/05/finally-the-possibility-of-a-wonderful-new-investment-tool-the-vix-etf/

But many times there are new products and investment changes we discourage. As you know we have written many times about the repeal of the uptick rule just after the rule was changed, and before the much publicized reinstatement possibilities.

Today there is an even more prolific investment product we do not encourage in our firm and want to warn investors accordingly.


Leveraged ETF’s in most cases are index related ETF’s that attempt to move two or three times the movements of the prevailing index. Due to the re-balancing methods of these funds, they regularly do not achieve the desired mission. We warn most long term investors of their use, and as said before, do not recommend these funds in our firm. Great caution is advised if an investor chooses to use these funds. JK

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