A Leveraged ETF Investor’s Checklist

December 09, 2014

sugarplums_gingerbread

Each elf expects a sweet 30 percent return. However, the volatility that’s apparent in the “gingerbread” chart above hurts returns, lowering them to 26 percent, while the smooth drop in the sugarplum index makes a great bet even better, lifting gains to 35 percent. (The returns are hypothetical, but the math is real for daily resetting triple-exposure securities.)

 

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