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Gold/Mining/Energy : Big Dog's Boom Boom Room
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To: JimisJim who wrote (187784)1/6/2015 1:21:19 AM
From: Sailing2  Read Replies (1) of 206085
 
I don't disagree that most of the leveraged ETF's of the past amounted to scams, suitable only for trading intra-day or a couple of days at best. However, Velocity Shares introduced a new generation of ETN's that do not suffer from this fatal problem of "rollover" declines.

Take a look at a 3 year chart of UWTI for example, a 3X leveraged oil ETN. For more than two and half years after its introduction the share price of this ETN remained roughly constant at about $30 as the price of oil was roughly constant over this period. There was none of the catastrophic decline associated with earlier leveraged ETFs over a multi-year period. Only in October when oil began to decline rapidly did the price of UWTI decline dramatically as it should given the leverage. There is no reason to believe the price of UWTI won't go back to $30 if oil goes back to $100.

Having said all this, it's not my intention to encourage anyone to trade with leverage. I merely want to make the point not all leveraged ETF's and ETN's are the same.
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