[talkgold]

Any opinions on the 3X ETFs like BGU (3x long large caps) etc? I put some money into this because it will triple whatever recovery the market has. I guess the negative is that I could lose a ton too, but I'm optimistic about the market right now.

[contrarian]

Opinions?

I think they're a great way to maximise the use of your capital.
I trade etf's quite a lot lately.

As you mentioned though, leverage is a double-edged sword... so your analysis better be sound ;-]

[teenwolf41]

I dislike the leverage ETFs, you don't get 3x anything, its just day to day trends. If you are a good day trader than sure these things are good. If you get double long gold etf and gold rallies, you won't make more than just owning a gold stock. If you get triple the DOW long and the dow rallies 10%, you don't get a 30% return on that ETF. They don't work, and I dislike them. Much easier to read a balance sheet and fundamentals than buying/shorting something that doesn't even work.

/end rant

[talkgold]

teenwolf, I don;t think that's correct. It does trade at about 3X's the dows gain or loss. Today for instance, Dow up 2.6%. BGU up 7.6%. Pretty close.

[teenwolf41]

Originally Posted by talkgold

teenwolf, I don;t think that's correct. It does trade at about 3X's the dows gain or loss. Today for instance, Dow up 2.6%. BGU up 7.6%. Pretty close.

It shouldn't be pretty close, it should be 3x exactly, since thats what its intended to do. I'll never find the link for this, but I read somewhere that during the beginning of the financial crisis, the ETF bank index was down like 40% (example number) and the SKF, the ultra short financial was down like 5%. If its double short that bank index it should actually be UP 80% and not down. But anyway, why invest in an ETF where it has a basket of stocks, some good some bad when you can just invest in the best one?

[contrarian]

I think the clue is in the title...

Leverage.