anyone who buys a leveraged etf (2x or 3x) and ‘buys and holds’ it thinking that if they make the right call (i.e. buy a double long etf and the underlying index goes up), they will make money is very mistaken. It is very easy for you to guess correctly for the direction of the asset class (like China, Real Estate, S&P500, etc), but have your leveraged ETF LOSE money! Be careful what leverage does to those investments in highly volatile markets.
You MUST average in and out of them to even have a chance to come out ahead.
For example, look at FXI/FXP. (China)
FXI is near its lows (relative to the high), yet FXP which goes ultra (2x) short the China 25 is near it’s low as well and VERY far from the high. One would think that if FXI was near a low that FXP would be near a high. Guess again! That’s how you lose money being right.
