I consider it vital that ordinary investors retain the right to invest in leveraged, inverse funds such as UVXY. During market declines, these are frequently nearly the only investments that go up, while everything else goes down together like a flock of birds. During the financial crisis of 2008, I was wiped out because I only invested in stocks which my investment letters assured me would be hardy enough to withstand any correction. Instead, I found out the hard way, they all dropped together. If I had been aware of and made use of leveraged inverse financial instruments at the time, it could have rescued me from financial disaster.
Recently (up through 4-20-22), I had my entire portfolio invested in 580 shares of the levereged inverse ETF UVXY. I had bought these shares for an average price of about $16.30. But suddenly, despite no effective solutions being found for the various problems the market was facing, the market made a sustained move upwards. When UVXY had dropped to around $11.50, Fidelity notified me that my portfolio was very risky because it was so concentrated. Unfortunately, I took their advice and sold my UVXY and invested the money into a diversified group of stocks which were currently most recommended by the well-respected and time-tested Motley Fool brothers. Their stocks generally perform very well over the long run, but can do very poorly over brief periods when the market drops.
Taking Fidelity's advice, I sold my shares of UVXY for an average price of about $12.30 on 4-20-22. As a result of taking this trite advice from Fidelity to diversify right when UVXY was near its low, I missed out on potential gains of $2,859 by 4-26 if I had held onto my UVXY (580 shares x $4.93). Meanwhile, my "safe" group of diversified stocks recommended by Motley Fool and purchased on 4-21 near their lows for the year were down $1,705 by 4-26 since the time I purchased them. As a result of following Fidelity's "sage" advice to get out of my "risky" concentrated investment in UVXY and to diversify into 9 highly recommended stocks (no penny stocks!), my total account value on 4-26-22 was then only $5,821, instead of $$5,821 + $1,705.36 + $2,859.40 = $10,385.76! This demonstrates what a profound difference an investment in a leveraged, inverse ETF like UVXY could have made. As demonstrated here, under certain market conditions, a concentrated investment in a leveraged inverse ETF can actually be much safer than a diversified portfolio of excellent, highly recommended stocks (like ABNB, CRWD, DOCN, MRNA, NFLX, NTLA, SHOP, TSLA, UPST)! Please do not allow the privilege for ordinary investors to purchase such very useful financial instruments to be taken away! When used wisely, they can be a real lifesaver.
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Dr. Kirkman Comment On Regulatory Notice 22-08
I consider it vital that ordinary investors retain the right to invest in leveraged, inverse funds such as UVXY. During market declines, these are frequently nearly the only investments that go up, while everything else goes down together like a flock of birds. During the financial crisis of 2008, I was wiped out because I only invested in stocks which my investment letters assured me would be hardy enough to withstand any correction. Instead, I found out the hard way, they all dropped together. If I had been aware of and made use of leveraged inverse financial instruments at the time, it could have rescued me from financial disaster.
Recently (up through 4-20-22), I had my entire portfolio invested in 580 shares of the levereged inverse ETF UVXY. I had bought these shares for an average price of about $16.30. But suddenly, despite no effective solutions being found for the various problems the market was facing, the market made a sustained move upwards. When UVXY had dropped to around $11.50, Fidelity notified me that my portfolio was very risky because it was so concentrated. Unfortunately, I took their advice and sold my UVXY and invested the money into a diversified group of stocks which were currently most recommended by the well-respected and time-tested Motley Fool brothers. Their stocks generally perform very well over the long run, but can do very poorly over brief periods when the market drops.
Taking Fidelity's advice, I sold my shares of UVXY for an average price of about $12.30 on 4-20-22. As a result of taking this trite advice from Fidelity to diversify right when UVXY was near its low, I missed out on potential gains of $2,859 by 4-26 if I had held onto my UVXY (580 shares x $4.93). Meanwhile, my "safe" group of diversified stocks recommended by Motley Fool and purchased on 4-21 near their lows for the year were down $1,705 by 4-26 since the time I purchased them. As a result of following Fidelity's "sage" advice to get out of my "risky" concentrated investment in UVXY and to diversify into 9 highly recommended stocks (no penny stocks!), my total account value on 4-26-22 was then only $5,821, instead of $$5,821 + $1,705.36 + $2,859.40 = $10,385.76! This demonstrates what a profound difference an investment in a leveraged, inverse ETF like UVXY could have made. As demonstrated here, under certain market conditions, a concentrated investment in a leveraged inverse ETF can actually be much safer than a diversified portfolio of excellent, highly recommended stocks (like ABNB, CRWD, DOCN, MRNA, NFLX, NTLA, SHOP, TSLA, UPST)! Please do not allow the privilege for ordinary investors to purchase such very useful financial instruments to be taken away! When used wisely, they can be a real lifesaver.