“One question, is your statement regarding etfs, extending to the negative correlated ones. ”
Truth is, I don’t have all the answers or in-depth understanding of the various areas of risk for ETF’s. I do know that multiple brilliant market analysts with great track records have in recent years have emphasized the risks they are seeing with certain categories of securities, such as ETF’s. They know something. They understand the risks of ETF’s and it has them scared.
1) ETF’s prospectus reveal multiple levels of counterparty risk, and most importantly most ETF’s don’t actually hold much or all of the underlying asset they are intended to have a correlation with. Usually, they hold some basket of derivatives of that asset that are intended to create the intended (-200%,-100%, +100%, +200%, etc) correlation with the primary asset AND MOST IMPORTANTLY the prospectus allows the ETF add to their profits via additional market actions (puts, write calls/puts, whatever) on those derivatives), meaning at any point in time there is considerable counterparty risk for much of assets in an ETF.
For example, the gold ETF’s prospectus allows them to hold complex gold futures contracts or other derivatives INSTEAD of physical gold PLUS they can write derivatives (or loan out) against any physical gold they own, plus they have ZERO liability of the ETF fails to maintain the correlation to the asset
2) There are weird pricing instability issues with ETF’s that were confirmed with the recent “flash cash” where the investigation has already confirmed about 60% or 70% of the securities that had value crash temporarily in the flash crash were ETF’s.
So certainly these factors also mean same risks for SQQQ.
