Comments on: The Trouble With Leveraged ETFs http://canadiancouchpotato.com/2010/01/26/the-trouble-with-leveraged-etf/?utm_source=rss&utm_medium=rss&utm_campaign=the-trouble-with-leveraged-etf Your guide to the investment strategy that will help you earn more and sleep better. Thu, 17 May 2012 00:11:49 +0000 hourly 1 http://wordpress.org/?v=3.3.2 By: Maxwell C. http://canadiancouchpotato.com/2010/01/26/the-trouble-with-leveraged-etf/comment-page-1/#comment-14173 Maxwell C. Mon, 04 Jul 2011 23:36:27 +0000 http://canadiancouchpotato.com/?p=480#comment-14173 I really love the little corrections that are oft added by math-whizzes here :-) I really love the little corrections that are oft added by math-whizzes here :-)

]]> By: Canadian Couch Potato http://canadiancouchpotato.com/2010/01/26/the-trouble-with-leveraged-etf/comment-page-1/#comment-189 Canadian Couch Potato Wed, 24 Mar 2010 23:35:29 +0000 http://canadiancouchpotato.com/?p=480#comment-189 Thanks for spotting the error, Raman. I've corrected it above. It actually makes the argument a lot stronger! Thanks for spotting the error, Raman. I’ve corrected it above. It actually makes the argument a lot stronger!

]]> By: Raman http://canadiancouchpotato.com/2010/01/26/the-trouble-with-leveraged-etf/comment-page-1/#comment-188 Raman Wed, 24 Mar 2010 19:55:47 +0000 http://canadiancouchpotato.com/?p=480#comment-188 Nice post. However, there is a mistake in your calculations in the following sentence: "A $1,000 investment would fall 4% to $960, and then gain 4% to $998.40. (This would also be true for a non-leveraged ETF that lost 2% and gained 2%, but the loss would be half as much.)" In fact, a non-leveraged ETF that lost 2% and gained 2% would have lost one-quarter as much, not half as much. This can be shown as follows: (1-x)*(1+x) = 1-x^2 whereas (1-2x)*(1+2x) = 1-4x^2. Nice post. However, there is a mistake in your calculations in the following sentence: “A $1,000 investment would fall 4% to $960, and then gain 4% to $998.40. (This would also be true for a non-leveraged ETF that lost 2% and gained 2%, but the loss would be half as much.)”

In fact, a non-leveraged ETF that lost 2% and gained 2% would have lost one-quarter as much, not half as much. This can be shown as follows:

(1-x)*(1+x) = 1-x^2
whereas
(1-2x)*(1+2x) = 1-4x^2.

]]> By: Cliff http://canadiancouchpotato.com/2010/01/26/the-trouble-with-leveraged-etf/comment-page-1/#comment-187 Cliff Tue, 09 Mar 2010 15:26:31 +0000 http://canadiancouchpotato.com/?p=480#comment-187 Well put. I see a lot of people calling Larry Berman on Berman's call with questions about leveradged etf's. Althogh Larry does advise against holding them long term, he should be telling callers to, "Stay away fom them!" Well put. I see a lot of people calling Larry Berman on Berman’s call with questions about leveradged etf’s. Althogh Larry does advise against holding them long term, he should be telling callers to, “Stay away fom them!”

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