Comments on: Best ETF’s for 2010…how to choose? (Part 2)

By: IS

IS — Tue, 26 Jan 2010 01:48:18 +0000

@Lewis – Actually, time decay is how these ETF’s are made. Later this year, there will be ETF’s launched that are leveraged on the montly return instead of the daily returns. But there are good and bad things about it. I’d say the most important is to be aware of how the product works and yes, how the time decay impacts the returns.

By: Lewis

Lewis — Wed, 20 Jan 2010 20:08:23 +0000

I’m really interested with time decay on leveraged etfs. what are your thoughts about it?

By: Stuart

Stuart — Thu, 24 Dec 2009 00:08:35 +0000

I agree. Leveraged ETFS are for homeruns only. You should only own these for a short time frame like day-trading. I attempted this in the summer when the volatility dried up thought and lost my shirt.

You could always short the 3X Bear and 3X Bull at the same time to take advantage of the rebalancing and interest costs.

By: Frank

Frank — Wed, 23 Dec 2009 14:20:59 +0000

I agree IS. I think that 3 times leveraged ETFs are hard to trade: you need to be 3 times faster than the market (Prices change so dramatically!) I would also be “triple” careful trading on margin with these kinds of product. They are three times more dangerous than the underlying indexes. No buy-and-hold strategy, that’s for sure.