I am vehemently opposed to regulators restricting my ability to invest in leveraged and inverse funds. I have been using such funds for close to two decades -- they are an essential part of my investing approach, allowing me to preserve capital in down markets by investing in leveraged funds using less cash for the same amount of "firepower." Restricting my ability to invest in such funds will therefore increase my risk by making me commit a larger portion of my capital for the same exposure to the market. Also, when market direction is uncertain, as it is today, I use inverse funds to hedge my long positions; if I could not do this, I'd be forced to buy and sell in whipsaw fashion during every failed rally, rather than hedge once and wait out the volatility.
I clearly understand how to use leveraged and inverse funds safely. Shutting me out of this investment approach because of some arbitrary litmus test would severely damage my ability to earn worthwhile and competitive returns and put me at a disadvantage to other investors who remain arbitrarily authorized to use these tools. Please don't make investing undemocratic. The current system isn't broken; don't try to "fix" it!
Michael Cooper Comment On Regulatory Notice 22-08
I am vehemently opposed to regulators restricting my ability to invest in leveraged and inverse funds. I have been using such funds for close to two decades -- they are an essential part of my investing approach, allowing me to preserve capital in down markets by investing in leveraged funds using less cash for the same amount of "firepower." Restricting my ability to invest in such funds will therefore increase my risk by making me commit a larger portion of my capital for the same exposure to the market. Also, when market direction is uncertain, as it is today, I use inverse funds to hedge my long positions; if I could not do this, I'd be forced to buy and sell in whipsaw fashion during every failed rally, rather than hedge once and wait out the volatility.
I clearly understand how to use leveraged and inverse funds safely. Shutting me out of this investment approach because of some arbitrary litmus test would severely damage my ability to earn worthwhile and competitive returns and put me at a disadvantage to other investors who remain arbitrarily authorized to use these tools. Please don't make investing undemocratic. The current system isn't broken; don't try to "fix" it!