Five ETFs Not for the Faint of Heart
Michael Anderson submits:There are all types of investors: dividend, ETF, long-term, short-term, day traders, value, small cap, large cap, and international investors, plus many more. A variety of combinations of all of the different types of investment strategies can occur as well. Every investor’s goal is to make money and some are satisfied with less of a return to carry less risk. There is nothing wrong with anyone’s style, but approaches and strategies can be changed to gain better returns and even taking on more risk as a small portion of a portfolio. Many like to take on a lot of risk, trying to get the best possible return. What I am going to do is take a brief look at some of the Ultra/UltraShort – (2X) and the Direxion Bull/Bear-(3x) ETFs. As I try to continually state, doing research, realizing value, and using common sense can allow an individual to have a solid idea of the direction of a market and/or stock, but also determine risk-factor as well. In 2009, investing in one of these ETFs, Direxion Daily Financial Bull 3X Shares (FAS), I was able to have a return of more than 300% because I decided to take a bigger risk and have FAS be more than 75% of my portfolio. These ETFs can be very effective when there has been a big run up, but especially on a big downturn and little downside, it helps alleviate the risk. An individual having FAS present in 10% of their total portfolio throughout 2009 at an average price of $7, and sold at an average of $32 up to 2011, all other investments being even, would have a return of 37.5% over 2 years. Again, with all other investments in that example portfolio returning 0%, the return would have been an average of almost 18% per year in each of those years. Complete Story »
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