Generation Y Investor » Leveraged ETF’s http://generationyinvestor.com Gen Y's Home for Investment Education, News & Commentary Tue, 03 Nov 2009 01:42:13 +0000 http://wordpress.org/?v=2.8.1 en hourly 1 Cramer Talks About Ultra Short ETF’s http://generationyinvestor.com/2009/01/14/cramer-talks-about-ultra-short-etfs/ http://generationyinvestor.com/2009/01/14/cramer-talks-about-ultra-short-etfs/#comments Thu, 15 Jan 2009 01:07:36 +0000 Stephen Kline http://generationyinvestor.com/?p=652 In my previous post I talked about the dangers of leveraged ETF’s. As a follow up to that post here is a video of Cramer discussing these products…

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]]> In my previous post I talked about the dangers of leveraged ETF’s. As a follow up to that post here is a video of Cramer discussing these products…

LINK

]]> http://generationyinvestor.com/2009/01/14/cramer-talks-about-ultra-short-etfs/feed/ 0 Be Weary Of Leveraged ETF’s http://generationyinvestor.com/2009/01/06/be-weary-of-leveraged-etfs/ http://generationyinvestor.com/2009/01/06/be-weary-of-leveraged-etfs/#comments Wed, 07 Jan 2009 01:24:19 +0000 Stephen Kline http://generationyinvestor.com/?p=628 Over the past year or two the popularity of leveraged ETF’s has increased tremendously.  These ETF’s seek to double or triple the returns on various stock indexes.  Leveraged ETFs function by using financial derivatives, such as options, swaps, and index futures to magnify the returns on a particular basket of stocks. (Sometimes leveraged ETF’s will [...]]]> Over the past year or two the popularity of leveraged ETF’s has increased tremendously.  These ETF’s seek to double or triple the returns on various stock indexes.  Leveraged ETFs function by using financial derivatives, such as options, swaps, and index futures to magnify the returns on a particular basket of stocks. (Sometimes leveraged ETF’s will even seek to return double or triple the inverse of an index)

I was planning on writing a whole post about the pitfalls of these funds.  However, it would have been too hard for me to explain their dangers without getting into complicated compounding math. This video explains why these ETF’s don’t give investors the returns they may be expecting…

The bottom line is leveraged ETF’s aren’t a good choice for long-term investors.  These funds are meant to be used by professional traders with short term holding periods.  I’d highly recommend that amateur investors stay away from them.

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