1. You have to be right
If you pick the wrong direction you find out fast as the market moves against you. In unleveraged investments you are allowed to drift slowly in the wrong direction before an abrupt crash. This is akin to the Titanic as it drifted into that iceberg patch. Unleveraged investments leave a lot of room for debate about what is going on with the investment and whether it’s in a correction or something more serious. Not so with leveraged ETFs.
With leveraged ETFs bad decisions are immediate and require a response which brings us to #2.
2. You have to do something when you’re wrong
Because you’re using leverage you can’t just sit there and be wrong, you can’t wait for the market to come back, you have to sell and rethink your position on the market. But it’s important to be careful here – we’re not talking about day trading, but rather taking a position that’s obviously wrong, realizing it, and making a correction.
Ex: Going long the S&P 500 in the fall of 2008 or tech stocks in the spring of 2000.
3. You have to keep taking risk
Once you sell you need to pick a spot to come back in, you can’t just sit on the sideline forever. This requires a lot of emotional fortitude that most investors (and advisors) do not possess.
4. Results come – fast
Unlike buy and hold policies that take forever to materialize, leverage shows winners and losers fast.
5. You can’t hide
There is no need to diversify, the leverage will get you about the same results in almost every category. Yes there are outliers, but trying to pick them ahead of the outperformance actually happening truly requires a crystal ball and quite frankly isn’t necessary. If you can earn 25% with a standard market cap leveraged ETF – something that isn’t impossible throughout the year, why try to guess the direction of commodity prices or if the real estate market is going to pick up? Just ride the direction of the stock market – which is usually up.
Leveraged ETFs are the Most Powerful Investments on Earth!
1) They help Young Professionals multiply daily returns and become millionaires.
2) They reduce investment risk for Baby Boomers by reducing the amount of capital and time invested in the market
3) They are a great compliment to Hedge Fund Investors seeking hedge fund performance and greater liquidity without the “2 & 20″ cost structure.
They are quite frankly the greatest thing since sliced bread.
And they require expert handling. I am that expert.
If you are considering using leveraged ETFs I invite you to contact me, Maurice Wilson, via phone at 704-222-4162 or e-mail me at firstname.lastname@example.org
Join me on Facebook: http://www.facebook.com/theleveragedetfexpert
Company Website: www.wilsonwealth.com
About Maurice: Through his firm Wilson Wealth, Maurice Wilson uses leveraged ETFs to magnify returns for aggressive investors seeking high returns while reducing investment risk for retirees looking to protect their nest egg.
DISCLAIMER: The information presented in this article is meant for informational and educational purposes only and is not be construed as investment advice. Please contact your financial advisor before using this information in your investment portfolio. At any given time Maurice Wilson or the advisors of Wilson Wealth Management Group, LLC may hold positions in the investments mentioned in this article and thus have a potential conflict of interest.