To whom it may concern:
People nowadays have internet resources that are comparable to those of the Wall Street investors. I, for example, uses excel to calculate risk and rewards based on data collected from various brokerages/yahoo finance/bloomberg/LPLfinance...etc. A test imposed by regulators may have nothing to do with my excel calculations and probably remotely relevant to the success of an investor. A restriction of high net worth would only limit low net worth individuals from accomplishing the American dream, while giving the already successful individuals the right to continually use their successful strategy that probably does not involve the leveraged ETFs to begin with. Attest to reading certain materials may be a somehow acceptable way but rather unnecessary: the government should be protecting those who wants to be protected (those who seek for knowledge and wishes to obtain the "correct/accurate" knowledge) instead of those who wishes to "gamble away their money" without understanding the assets they are dealing with. Protecting gamblers from harm is not the government's job. In regard to "cooling-off" periods, I am strongly against this restriction. Buying the dips is a common strategy for investors. Suppose I have calculated that the relative dip have emerged and would begin to accumulate my shares during a 1-week period but was off-set by the "cooling-off" rule, what should my strategy be? Would I be forced to average in my prices during times of downtrend when I have the ability to buy the dip?
In conclusion, I would advocate not enforcing any regulations against individual investors. The choice to invest in what kind of assets, no matter how complex it is, as well as the risk-and-reward, should be the right of individual investors. A high net-worth only proves that a person is rich and probably has nothing to do with the investor's ability to invest. I, as a doctor, may easily pass a regulator-imposed test with high scores, but has nothing to do with my irrational trading behavior or the success of my investing strategy. The "cooling off periods" is not clearly defined but doesn't sound like a good method either. Lastly, "attest to reading certain materials" may have little benefit for careful investors since they probably have already done their homework, while the gamblers would not be be interested in reading anyway. If the goal of the FINRA were to protect investors from harm, it is the activity of shady Hedge fund managers that should be evaluated. Restricting investors from practicing calculated investing strategies by requiring exams and reading materials or setting restrictions based on net worth or test-taking ability is unnecessary.
One more thing, "limiting part of your overall portfolio" also does not make sense to me. For example, if I were to exchange my shares from QQQs to TQQQs as the price falls by 10, 20, 30, 40, 50% as a downside protection, while exchanging the shares back to QQQs when the trend reverses, this would have been a decent strategy, but would not be applicable once the restriction is imposed. This would even HARM the investor if the restriction begins NOW and the strategy is half-way in. All I can see is the harms that the regulations would BRING to the investors instead of the benefits/protections that they have to offer.
Please reconsider the purpose of your regulation, the harms that would bring to the investors (especially leveraged ETF investors), and the ones you want to protect. Perhaps you have seen immense losses in many investors at the time you are evaluating the data presented to you, but currently we the S&P is already down 15-20% and everyone is harmed. To impose regulations at a time when investors may recover from losses at a time of relatively good buying opportunity (when viewed long-term in a 10-20 year horizon) through leveraged ETF would only make things worse. Investors would not be able to recover from the harm because this is PART of their strategy. Why would you want to impose restrictions of assets that you've passed, and NOT allow people to practice investing strategies that they've spent years of time to calculate and practice? What about bitcoin ETFs, Emerging market ETFs, China stock regulations, small-cap ETFs, OTC pinksheet/ pennystock limitations? All these high-risk low-reward assets have not been adequately restricted, while the leveraged ETFs is being evaluated, and especially at THIS particular time, is very unwise.
In conclusion, please reconsider imposing any restrictions on leveraged ETFs, for this may do more harm than benefit to the investors. Think of the people you're trying to protect, the hows, what they have done wrong, I doubt that the problem lies with the leveraged ETFs. The poor returns are most likely secondary to the relentless inflation, the
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Alexander Chen Comment On Regulatory Notice 22-08
To whom it may concern:
People nowadays have internet resources that are comparable to those of the Wall Street investors. I, for example, uses excel to calculate risk and rewards based on data collected from various brokerages/yahoo finance/bloomberg/LPLfinance...etc. A test imposed by regulators may have nothing to do with my excel calculations and probably remotely relevant to the success of an investor. A restriction of high net worth would only limit low net worth individuals from accomplishing the American dream, while giving the already successful individuals the right to continually use their successful strategy that probably does not involve the leveraged ETFs to begin with. Attest to reading certain materials may be a somehow acceptable way but rather unnecessary: the government should be protecting those who wants to be protected (those who seek for knowledge and wishes to obtain the "correct/accurate" knowledge) instead of those who wishes to "gamble away their money" without understanding the assets they are dealing with. Protecting gamblers from harm is not the government's job. In regard to "cooling-off" periods, I am strongly against this restriction. Buying the dips is a common strategy for investors. Suppose I have calculated that the relative dip have emerged and would begin to accumulate my shares during a 1-week period but was off-set by the "cooling-off" rule, what should my strategy be? Would I be forced to average in my prices during times of downtrend when I have the ability to buy the dip?
In conclusion, I would advocate not enforcing any regulations against individual investors. The choice to invest in what kind of assets, no matter how complex it is, as well as the risk-and-reward, should be the right of individual investors. A high net-worth only proves that a person is rich and probably has nothing to do with the investor's ability to invest. I, as a doctor, may easily pass a regulator-imposed test with high scores, but has nothing to do with my irrational trading behavior or the success of my investing strategy. The "cooling off periods" is not clearly defined but doesn't sound like a good method either. Lastly, "attest to reading certain materials" may have little benefit for careful investors since they probably have already done their homework, while the gamblers would not be be interested in reading anyway. If the goal of the FINRA were to protect investors from harm, it is the activity of shady Hedge fund managers that should be evaluated. Restricting investors from practicing calculated investing strategies by requiring exams and reading materials or setting restrictions based on net worth or test-taking ability is unnecessary.
One more thing, "limiting part of your overall portfolio" also does not make sense to me. For example, if I were to exchange my shares from QQQs to TQQQs as the price falls by 10, 20, 30, 40, 50% as a downside protection, while exchanging the shares back to QQQs when the trend reverses, this would have been a decent strategy, but would not be applicable once the restriction is imposed. This would even HARM the investor if the restriction begins NOW and the strategy is half-way in. All I can see is the harms that the regulations would BRING to the investors instead of the benefits/protections that they have to offer.
Please reconsider the purpose of your regulation, the harms that would bring to the investors (especially leveraged ETF investors), and the ones you want to protect. Perhaps you have seen immense losses in many investors at the time you are evaluating the data presented to you, but currently we the S&P is already down 15-20% and everyone is harmed. To impose regulations at a time when investors may recover from losses at a time of relatively good buying opportunity (when viewed long-term in a 10-20 year horizon) through leveraged ETF would only make things worse. Investors would not be able to recover from the harm because this is PART of their strategy. Why would you want to impose restrictions of assets that you've passed, and NOT allow people to practice investing strategies that they've spent years of time to calculate and practice? What about bitcoin ETFs, Emerging market ETFs, China stock regulations, small-cap ETFs, OTC pinksheet/ pennystock limitations? All these high-risk low-reward assets have not been adequately restricted, while the leveraged ETFs is being evaluated, and especially at THIS particular time, is very unwise.
In conclusion, please reconsider imposing any restrictions on leveraged ETFs, for this may do more harm than benefit to the investors. Think of the people you're trying to protect, the hows, what they have done wrong, I doubt that the problem lies with the leveraged ETFs. The poor returns are most likely secondary to the relentless inflation, the