I recieved an email today about proposed restrictions on inverse and leveraged funds. I want to express how these funds can be a valuable tool to retail investors
With so many changes in trading in the last few years. No fee and fractional shares. It has opened opportunity to people with less money to invest
For years i used a name brand broker buying their mutual funds and holding forever. I would ask the question why dont we ever sell at highs to rebuy at a lower price later. I shopped for a new broker but just found the same response you cant time the market. Which you cant. However you can see the writing on the wall when a fund reaches a peak or valley high or low. The guy with high net worth begins buying protection/ leveraged or inverse funds for the reversal that will come. When it happens those proceeds can reinvest for future gains in safer more stable equities.
The retail investor with small net worth in the same situation has to ride the wave and just end up back where they were before.
Of course these are riskier but used conservatively and understanding they are not a buy and hold item but once they have served their purpose and move. Sell them or buy depending on purpose
Another use i have helped people with is just helping grow a small account when you just having it setting in a bank savings account gaing .0025 %. Though you pay short term capitol gains nobody complains that i have helped to pay tax on money that far exceeds what the bank would pay
Example qqq to track nasdaq. Thats the longer term safer hold tqqq and sqqq for protection on the swings. Im not a financial advisor but this has been easy to share with people who dont have confidence in the market with small budgets and i have seen it work because of the inverse funds. Vixy vs dia another example.
All investment in risk and uour own research to know what your buying is paramount but all investors should have the same tools available not based on your net worth
Henry Holman Comment On Regulatory Notice 22-08
I recieved an email today about proposed restrictions on inverse and leveraged funds. I want to express how these funds can be a valuable tool to retail investors
With so many changes in trading in the last few years. No fee and fractional shares. It has opened opportunity to people with less money to invest
For years i used a name brand broker buying their mutual funds and holding forever. I would ask the question why dont we ever sell at highs to rebuy at a lower price later. I shopped for a new broker but just found the same response you cant time the market. Which you cant. However you can see the writing on the wall when a fund reaches a peak or valley high or low. The guy with high net worth begins buying protection/ leveraged or inverse funds for the reversal that will come. When it happens those proceeds can reinvest for future gains in safer more stable equities.
The retail investor with small net worth in the same situation has to ride the wave and just end up back where they were before.
Of course these are riskier but used conservatively and understanding they are not a buy and hold item but once they have served their purpose and move. Sell them or buy depending on purpose
Another use i have helped people with is just helping grow a small account when you just having it setting in a bank savings account gaing .0025 %. Though you pay short term capitol gains nobody complains that i have helped to pay tax on money that far exceeds what the bank would pay
Example qqq to track nasdaq. Thats the longer term safer hold tqqq and sqqq for protection on the swings. Im not a financial advisor but this has been easy to share with people who dont have confidence in the market with small budgets and i have seen it work because of the inverse funds. Vixy vs dia another example.
All investment in risk and uour own research to know what your buying is paramount but all investors should have the same tools available not based on your net worth