At the January 2022 high the market was at the highest valuation in 140 years. Driven in large part by Fed extreme monetary policy and reckless politician fiscal spending. It is not surprising that the most speculative investments continue to destroy capital as tge markets unwind. We are likely not even at the mid-point where this market bottoms. S&P 500 ~2,300 seems a best scenario target, or equivalent to the pandemic bottom, and beginning of most extreme bureaucratic economic meddling.
DGTD prediction resolution!
Sort of. Igy didn't put a time on this prediction. But the prediction has had a year to marinate and that's a long time.
11/15/2022, page 2958
When made the SP500 was at 3991
The prediction was Sp500 2300, or -42% from that mark.
But instead today we are at SP500 4495, which is a gain of 13%
We are 95% higher today than Igy's prediction.
Going to have to give Igy a strike on this one. The baseball kind, not the bowling kind.
Nearly everything has doubled in price since January of 2021. If the S&P is at $4,500.00 now, I am guessing it was at $2,250.00 in January of 2021 because if it has not, then it has not kept up with inflation.
Tencent has stockpiled several generations worth of Nvidia high end AI chips. Yet, in 10 trading days, $NVDA has added $280,000,000,000 in market cap. To put that into perspective, this company makes about 10B per quarter. They added 7 years of earnings in 10 days.
I am talking about the buy and hold dca strategy that many preach, like Flagpole, where you will not have to sell.
And Flagpole I am not talking about any particular annual gain, but a longer-term view, say 10-15 yrs min.
I can’t find any reason why you wouldn’t 3x if you plan on holding over a period over which you believe that historical returns have been positive. Ok maybe 15-20 years. The only reason would be potential fund insolvency/mismanagement.
Maybe I’m younger than you guys. I see no greater exposure, the same amount of capital is at risk, and over time, the risk is the same as a straight s&p, for something that never needs to be sold.
I am talking about the buy and hold dca strategy that many preach, like Flagpole, where you will not have to sell.
And Flagpole I am not talking about any particular annual gain, but a longer-term view, say 10-15 yrs min.
I can’t find any reason why you wouldn’t 3x if you plan on holding over a period over which you believe that historical returns have been positive. Ok maybe 15-20 years. The only reason would be potential fund insolvency/mismanagement.
Maybe I’m younger than you guys. I see no greater exposure, the same amount of capital is at risk, and over time, the risk is the same as a straight s&p, for something that never needs to be sold.
Swaps, 1% expense ratio.
While the same amount of capital is at risk, the risk isn’t remotely the same. Surely you understand that?
As a potentially interesting hypothetical example, imagine buying triple leveraged Qs just before the tech collapse. Do you think you would have had the wherewithal to hold that until today to see eventual gains?
'Over time, there's been a relationship, with higher inflation leading to lower multiples (to compensate for the way that inflation would eat into equity returns). Stock investors had better hope that this disinflation is immaculate.' bloomberg.com/opinion/articl…
I am talking about the buy and hold dca strategy that many preach, like Flagpole, where you will not have to sell.
And Flagpole I am not talking about any particular annual gain, but a longer-term view, say 10-15 yrs min.
I can’t find any reason why you wouldn’t 3x if you plan on holding over a period over which you believe that historical returns have been positive. Ok maybe 15-20 years. The only reason would be potential fund insolvency/mismanagement.
Maybe I’m younger than you guys. I see no greater exposure, the same amount of capital is at risk, and over time, the risk is the same as a straight s&p, for something that never needs to be sold.
Swaps, 1% expense ratio.
While the same amount of capital is at risk, the risk isn’t remotely the same. Surely you understand that?
As a potentially interesting hypothetical example, imagine buying triple leveraged Qs just before the tech collapse. Do you think you would have had the wherewithal to hold that until today to see eventual gains?
Since 3x ETFs maintain a fixed level of leverage, they face complete collapse if the underlying index declines more than 33% on a single day.
The risk you’re describing is behavioral, which doesn’t change if you never need to sell.
And exactly the same amount of capital is used. And by the theory that you shouldn’t invest what you can’t afford to lose, the risk of loss is exactly the same as with a 1x: irrelevant. Or, better yet: nonexistent.
While the same amount of capital is at risk, the risk isn’t remotely the same. Surely you understand that?
As a potentially interesting hypothetical example, imagine buying triple leveraged Qs just before the tech collapse. Do you think you would have had the wherewithal to hold that until today to see eventual gains?
Since 3x ETFs maintain a fixed level of leverage, they face complete collapse if the underlying index declines more than 33% on a single day.
They also have high fees that add up to significant losses in the long run.
SV yes that is a problem mot faced by 1x—but with market circuit breakers, could that actually happen at this point?
if the market falls 20% every 4-6 years...that would be a 50% or more loss in a 3x fund. Is that something you could take every 4-6 years? Losing half your money? On a regular basis?
Easy to say yes now, but when it is happening it is terrifying and hard not to sell out of resignation and fear.
SV yes that is a problem mot faced by 1x—but with market circuit breakers, could that actually happen at this point?
if the market falls 20% every 4-6 years...that would be a 50% or more loss in a 3x fund. Is that something you could take every 4-6 years? Losing half your money? On a regular basis?
Easy to say yes now, but when it is happening it is terrifying and hard not to sell out of resignation and fear.
That is what happened first part of 2020. Those tracking the S& P were down 40- to 50% not even counting the very high fees. Am not an expert on the 3x leveraged ETFs, but thought they were meant to be short term.
Such risk is the risk of a number on a piece of paper changing. One could pose exactly the same question of the original 20% drawdown on the 1x.
To me, the risk would be exactly the same: zero, because I don’t even consider the money. Yes I am capable of doing that, same as anyone else who is in for the long term.
Such risk is the risk of a number on a piece of paper changing. One could pose exactly the same question of the original 20% drawdown on the 1x.
To me, the risk would be exactly the same: zero, because I don’t even consider the money. Yes I am capable of doing that, same as anyone else who is in for the long term.
You asked what people thought about putting everything into a 3X leveraged ETF and pretty much everyone told you it was bad idea, yet for some reason you persist. Personally I think you should follow your heart and put every penny you have into one of these vehicles and see how it goes. Best of luck!
This post was edited 45 seconds after it was posted.
Such risk is the risk of a number on a piece of paper changing. One could pose exactly the same question of the original 20% drawdown on the 1x.
To me, the risk would be exactly the same: zero, because I don’t even consider the money. Yes I am capable of doing that, same as anyone else who is in for the long term.
Personally, I think you don’t understand risk, or at the least you are assigning some specific qualifiers that lead to a very narrow definition for your own particular purposes. All that said, I’m not trying to discourage you from doing this. If you have a few tens of thousands kicking around, burning a hole in your pocket, do go ahead and “invest” it in a triple leveraged fund. In 30 years, you could well be a gazillionaire. Of course, you must recognize that there is some good chance that money will have turned into ash by then. Which, as you say, doesn’t matter. Nothing ventured, nothing gained…
if the market falls 20% every 4-6 years...that would be a 50% or more loss in a 3x fund. Is that something you could take every 4-6 years? Losing half your money? On a regular basis?
Easy to say yes now, but when it is happening it is terrifying and hard not to sell out of resignation and fear.
That is what happened first part of 2020. Those tracking the S& P were down 40- to 50% not even counting the very high fees. Am not an expert on the 3x leveraged ETFs, but thought they were meant to be short term.
Yes, precisely. They are meant to be short term.
In fact, it says so on my brokerage, at the very top of the page, whenever you pull up a leveraged ETF. It reads:
"Leveraged, Inverse, and Commodity ETPs Not suitable for most investors. Investing in these types of exchange-traded products (ETPs) involves heightened risks, including higher margin requirements, leverage, derivatives, and complex investment strategies. These securities are designed for daily use only, and are generally not intended to be held overnight or long term."
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