Loren Herrigstad Comment On Regulatory Notice 22-08
Loren Herrigstad
N/A
I am currently a small investor, living off the income I earn actively investing. Leveraged and Inverse Exchange-Traded Funds (ETFs) are an important part of my investing strategy and income.
It has not taken me much time at all to learn how to use Leveraged and Inverse ETFs as part of my investing strategy. Concepts like decay, the effects of leveraging and daily resetting seem as easy to grasp as Price Earnings Ratio or Forward Earnings, which any investor can easily learn and should come to know. My brokerage, Charles Schwab, includes a clearly-written alert notice every time I open a new position in a Leveraged or Inverse ETF, that is sufficient for me, and should be sufficient for any self-directed investor.
I am deeply concerned that my ability to continue earning sufficient income from my active investing would be seriously harmed, even potentially ended, if I was barred by rule enhancements FINRA is considering from investing in Leveraged or Inverse ETFs. Even as a currently small individual investor, I know what I am doing in choosing to buy and sell Leveraged or Inverse ETFs for short periods and monitor any positions daily, and I have no need for being subjected to regulatory tests, minimum net worth requirements or any delay periods. I fear that my broker would likely bar me and other competent small investors from such investing products, and deny us the clear and convenient opportunities to grow our accounts with Leveraged and Inverse ETFs. Leveraged and Inverse ETFs provide a comparatively safer investing option than shorting individual stocks, buying them on margin, or buying options in some to many cases.
With Standard and Poor's reporting via their annual SPIVA scorecard that 79% of actively-managed mutual funds continue to trail the S&P 500 and Dow Jones Industrial Average indexes as well as the fact that the Net Asset Values of many actively-managed funds cannot be ascertained through the course of trading days (unlike ETFs), and that shares of such funds cannot be bought or sold except at the end of trading days (also unlike ETFs) it seems to me that investing in any of a good number of actively-managed mutual funds might be riskier with underperformance of indexes more certain than investing in Leveraged or Inverse ETFs.
Please do not restrict the access of competent but smaller investors like myself from Leveraged or Inverse ETFs especially in situations like the current market downturn in which Inverse ETFs can play an essential short-term role in either hedging long stock positions, or allowing some profit in a market that otherwise would seem to offer only a prospect of losses. And please do not limit smaller but competent investors like myself to a choice between individual stock issues that can at times be more erratic than even Leveraged or Inverse ETFs, or underperforming actively-managed funds where only small, and to me inadequate, returns, even losses, are offered.
In short, please leave FINRA's rules as they currently are, and allow individual investors the freedom that investing in America should offer of determining whether given investment or trading vehicle like Leveraged or Inverse ETFs are right for them.
Loren Herrigstad Comment On Regulatory Notice 22-08
I am currently a small investor, living off the income I earn actively investing. Leveraged and Inverse Exchange-Traded Funds (ETFs) are an important part of my investing strategy and income.
It has not taken me much time at all to learn how to use Leveraged and Inverse ETFs as part of my investing strategy. Concepts like decay, the effects of leveraging and daily resetting seem as easy to grasp as Price Earnings Ratio or Forward Earnings, which any investor can easily learn and should come to know. My brokerage, Charles Schwab, includes a clearly-written alert notice every time I open a new position in a Leveraged or Inverse ETF, that is sufficient for me, and should be sufficient for any self-directed investor.
I am deeply concerned that my ability to continue earning sufficient income from my active investing would be seriously harmed, even potentially ended, if I was barred by rule enhancements FINRA is considering from investing in Leveraged or Inverse ETFs. Even as a currently small individual investor, I know what I am doing in choosing to buy and sell Leveraged or Inverse ETFs for short periods and monitor any positions daily, and I have no need for being subjected to regulatory tests, minimum net worth requirements or any delay periods. I fear that my broker would likely bar me and other competent small investors from such investing products, and deny us the clear and convenient opportunities to grow our accounts with Leveraged and Inverse ETFs. Leveraged and Inverse ETFs provide a comparatively safer investing option than shorting individual stocks, buying them on margin, or buying options in some to many cases.
With Standard and Poor's reporting via their annual SPIVA scorecard that 79% of actively-managed mutual funds continue to trail the S&P 500 and Dow Jones Industrial Average indexes as well as the fact that the Net Asset Values of many actively-managed funds cannot be ascertained through the course of trading days (unlike ETFs), and that shares of such funds cannot be bought or sold except at the end of trading days (also unlike ETFs) it seems to me that investing in any of a good number of actively-managed mutual funds might be riskier with underperformance of indexes more certain than investing in Leveraged or Inverse ETFs.
Please do not restrict the access of competent but smaller investors like myself from Leveraged or Inverse ETFs especially in situations like the current market downturn in which Inverse ETFs can play an essential short-term role in either hedging long stock positions, or allowing some profit in a market that otherwise would seem to offer only a prospect of losses. And please do not limit smaller but competent investors like myself to a choice between individual stock issues that can at times be more erratic than even Leveraged or Inverse ETFs, or underperforming actively-managed funds where only small, and to me inadequate, returns, even losses, are offered.
In short, please leave FINRA's rules as they currently are, and allow individual investors the freedom that investing in America should offer of determining whether given investment or trading vehicle like Leveraged or Inverse ETFs are right for them.