High Octane Exchange traded funds.

Exchange traded funds sometimes referred to as ETFs can be a great investment. In the last decade a product called leveraged ETF’s has emerged. One fund which I actually own is TQQQ. The company that runs the fund states “ProShares UltraPro and UltraPro Short ETFs offer 3x and -3x exposure to major market indexes. They offer what, for many investors, is a more direct and efficient way to capitalize on market opportunities using leveraged and inverse exposure.” This fund is not for the faint of heart or the casual investor.

Substantial gains can be made using these funds. Let’s assume that I bought $10,000 worth of TQQQ when it first traded nine years ago on February 11, 2010. On August 30, 2018 it would have been worth over $450,000. Nice gain! By Christmas Eve it would have been worth only $186,000! Kind of hard to take that loss! Losses like this are nothing new to this fund. From July 26, 2011 to August 19 of the same year the fund lost almost one half of its value. Looking back if I would have bought on Christmas Eve I would have got in excess of a 50 percent gain as of this writing.

There is a wide array of leveraged ETF’s more than 160 that anyone can count. They are not for everybody. I do not recommend putting more than a small percentage of my assets in these funds.

Leveraged ETF’s can be helpful if you are timing the markets which will be the subject of my next blog.