Inverse ETFs, commodity based ETFs and alternative investment ETFs like BITO provide a simple mechanism to diversiy and hedge the market for any investor.
It’s a valuable investment tool for any investor who does not have access to highly specialized brokerage accounts with margin account.
Usually, the brokerage warns the investor about the dangers of such investments before the trade goes through.
When used wisely, judiciously and as a small portion of any portfolio, especially in a volatile market, it can hedge against losses which are bound to happen in a bear market.
The average investor, otherwise has no option other than to liquidate and wait out the turbulent period. The other option is to trade in the risky highly volatile options market.
As with any investment, one has to be vigilant and prompt in reversing course if any particular investment does not pan out. These ETFs provide a way of easily reversing course.
Even a dollar worth of profit is welcome. Usually, the commission and the tax is less than 100%. So, it’s a net gain.
Sometimes, a loss helps in reducing taxes. And, this option usually does not apply to average investor. But, can be used as a method of balancing taxes for a particular year. The option to use the strategy is available, if one chooses to use it.
Also, participating in such instruments gives an investor valuable knowledge and experience about alternative investments, which otherwise remain only available to sophisticated investors.
We learn from our mistakes. Sometimes, a loss is the best educator. Till, one doesn’t have skin in the game and participates, one doesn’t learn.
The SEC and FINRA should make rules that make such products more robust and not allow fly by night companies to float products which cannot meet SEC and FINRA safety criteria to protect investors.
Educating the average common investor and widespread participation will help make such products more robust and more inclusive in any portfolio.
SSonwalkar Comment On Regulatory Notice 22-08
Inverse ETFs, commodity based ETFs and alternative investment ETFs like BITO provide a simple mechanism to diversiy and hedge the market for any investor.
It’s a valuable investment tool for any investor who does not have access to highly specialized brokerage accounts with margin account.
Usually, the brokerage warns the investor about the dangers of such investments before the trade goes through.
When used wisely, judiciously and as a small portion of any portfolio, especially in a volatile market, it can hedge against losses which are bound to happen in a bear market.
The average investor, otherwise has no option other than to liquidate and wait out the turbulent period. The other option is to trade in the risky highly volatile options market.
As with any investment, one has to be vigilant and prompt in reversing course if any particular investment does not pan out. These ETFs provide a way of easily reversing course.
Even a dollar worth of profit is welcome. Usually, the commission and the tax is less than 100%. So, it’s a net gain.
Sometimes, a loss helps in reducing taxes. And, this option usually does not apply to average investor. But, can be used as a method of balancing taxes for a particular year. The option to use the strategy is available, if one chooses to use it.
Also, participating in such instruments gives an investor valuable knowledge and experience about alternative investments, which otherwise remain only available to sophisticated investors.
We learn from our mistakes. Sometimes, a loss is the best educator. Till, one doesn’t have skin in the game and participates, one doesn’t learn.
The SEC and FINRA should make rules that make such products more robust and not allow fly by night companies to float products which cannot meet SEC and FINRA safety criteria to protect investors.
Educating the average common investor and widespread participation will help make such products more robust and more inclusive in any portfolio.