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      11-30-2011, 03:03 PM   #522
BayMoWe335
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Drives: 2010 E92 335i 6MT
Join Date: Aug 2009
Location: US

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Quote:
Originally Posted by schoy View Post
Took a small position in FAZ yesterday, felt vindicated with the bank downgrades, and then today happens. At this point, I wonder if I should just ride it out or bail. I suppose I'll just let it sit LT.
Careful holding 3X leverage funds for any more than a trade. These funds are dangerous for long term investors because when they go down hard, it's much harder to dig out of the hole. A 3X leverage ETF will not outperform an unleveraged ETF with extreme volatility (Like now). Reason being? If you are down 50%, you have to make 100% to get back to even.

Moral of the story: Don't become a shareholder of a 3X leveraged fund. If you are wrong, take your medicine because you'll be down 50% before you know it. You might ask yourself why a 3X leveraged fund won't always outperform and non-leveraged fund. If you don't know the answer, you need to get out or fully understand it before trading them anymore.

Last edited by BayMoWe335; 11-30-2011 at 03:26 PM.