What's Scary Is People Will Listen and Make this Investment

in #steemleo5 years ago

The information and advice I see out on the interwebs is scary to be sometimes. I really don't know how some of it gets the following it does.

It is just this easy....

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SMH...because yeah, the SPXL (S&P 500 3X ETF) is gonna go up 30% per year for the next 19 years after doing it the past 10.

SERIOUSLY?!?

How can someone post this with a clean conscious?

This strategy may work for a year or two...but when the inevitable pullback/recession comes. You will have 3X the downside. If one was to do a strategy like this (which in history would likely never work because 19 straight years of 30% returns does not exist) you'd want to atleast start it right after a recession has occurred. Not when everything is already up a million percent the past decade.

Anyway, rant complete.

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Also left out is that the 3x funds are 3x daily volatility, not total returns.

But this kind of idiocy is rampant in the retail financial space. I've seen all kinds of stupidity and scams with clients. One guy came in with a sheet of bonds from an old Chinese railroad company bonds from the late 1800s. He's going to make millions! I point out that the company that issued the bonds and the country it was based in no longer exist. I point out that these bond sheets from this company are kind of collectible and show him the listings on eBay that go for about $15. But no, millions I tell you, millions!

You can't save people from themselves.

Well, if every other asset also keeps inflation in dollar terms this might work, though perhaps not like most think it will. :)

Hehe, that is one way to look at it! ;-)

i am getting to the point where i do not believe there can be a return.

You know, like the thought about putting one gold coin in a bank, at 0 AD, returning a mere 4% per year, and today you would have more gold than all the gold in the world.

The stock market is going up and up based on the FED printing (stealing money from everyone) to buy more bonds. So, for the view of the stock market going up, we are actually making everyone poorer.

If we had a known quantity of money, (like Litecoin) and that was all the money in the world, how could anyone make a % return? The only way is to create more goods with less labor. But that doesn't make a % return, it makes more things cheaper. (or the money gets more valuable)

But, the entire world is sold on the way to get rich is to make huge % gains.
Its all a ponzi scheme. As far as the eye can see, ponzi schemes.
At least at the roulette table you have a chance of winning

Well technically they aren't lying, but this is definitely shady.

All the more reason people need to quit following the masses and DYOR.

If you do include the recession of '09 that pullback was historically large so in the poster's defense (not really defending them) that skews the data in a negative direction from historical results.

It looks like someone has already executed this idea. However, he has just figured out back in 2010:

He purchased about $100,000 worth of Direxion Daily Financial Bull 3X shares FAS, and some $70,000 of Direxion Daily S&P 500 Bull 3x shares SPXL.

That’s right. The $170,000 initial investment just topped $1.5 million.

Source: https://www.marketwatch.com/story/millennial-consultant-sees-extremely-risky-investment-deliver-a-13-million-return-but-hes-still-not-quite-ready-to-sell-2019-11-20

I would buy 3X short NASDAQ (SQQQ) and 3X short Russel 2000 (TZA) at current level, wait till the election cycle (August-November, 2020). Democrats will always lead the presidential polls whoever win the election. Market will just panic on the outcome of a democratic president.

We can do it simulator.investopedia.com just for fun ;)

Oh wow, that trade is crazy if they don't book it that is just dumb. I would do like you said, cash out of it all and then put a chunk of it the shortside. Yeah, put on the paper trade atleast! :-)

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