William Connatser Comment On Regulatory Notice 22-08
William Connatser
N/A
As an educated & well-researched "retail" investor, I find this legislation incredibly insulting. The condescending essence of the idea that I am not capable of understanding the risks of leveraged and inverse ETFs is disgusting. Such ETFs have allowed me to outperform the major indexes through the bear market we are currently going through, and without access to them retail investors would have had no other choice than to go to cash which would further exacerbate the stress on the financial markets in an already stressful period. The reasons for my opinion are as follows: Firstly, most risks involved are obvious due to the naming conventions of these ETFs. Right from the get-go we are warned of the risks of leverage, non-diversification, and correlation. This is apparent and obvious to anyone involved in any transaction having to do with these instruments. Secondly, broker & issuer warnings, educational materials, social media posts, and prospectuses all help to convey risk and teach retail investors how they work. Such information makes it easy for retail investors to learn about more comlex risks such as derivate risks involving futures contracts & swaps and daily compounding. Thirdly, don't underestimate the general knowledge sharing within the retail investment community. We are not all "apes" "YOLOing" into "meme stonks" and NFTs. There is a large and growing community of retail investors who are becoming increasingly sophisticated, and I am certain that restricting access to more sophisticated investment vehicles will harm that trend of increasing main street sophistication. Anyone can learn anything for free on the internet, and Social Media applications are being used as tools to garner knowledge which inherently teaches us about risks associated with sophisticated investments. Fourthly, it is my view that the plethora of regulatory restrictions put on retail investors does more harm than good. The "Pattern Day Trading" rule can force retail investors to hold investments that are souring that they might have otherwise sold had that rule not existed after acquiring hindsight or as new information becomes available throughout the day. The PDT restrictions (among others) create an unequal playing field inbetween low-income retail investors, high-income retail investors and Wallstreet, and stoke division in an already highly polarized world. We don't need any additional rules for us that do not apply for the more privileged class under the guise of it being to protect ourselves from our own ignorance. This is incredibly insulting to low-income retail investors and harms credibility of regulators and institutions. In summary, especially after considering there are more arguments in addition to what I have listed here, there are a plentiful amount of reasons why more regulations are not necessary. Not only are they not necessary, but it is my view that they will do more harm than good. Regulators need to listen to retail investors' druthers instead of wrongly and insultingly attempting to save ourselves from ourselves.
William Connatser Comment On Regulatory Notice 22-08
As an educated & well-researched "retail" investor, I find this legislation incredibly insulting. The condescending essence of the idea that I am not capable of understanding the risks of leveraged and inverse ETFs is disgusting. Such ETFs have allowed me to outperform the major indexes through the bear market we are currently going through, and without access to them retail investors would have had no other choice than to go to cash which would further exacerbate the stress on the financial markets in an already stressful period. The reasons for my opinion are as follows: Firstly, most risks involved are obvious due to the naming conventions of these ETFs. Right from the get-go we are warned of the risks of leverage, non-diversification, and correlation. This is apparent and obvious to anyone involved in any transaction having to do with these instruments. Secondly, broker & issuer warnings, educational materials, social media posts, and prospectuses all help to convey risk and teach retail investors how they work. Such information makes it easy for retail investors to learn about more comlex risks such as derivate risks involving futures contracts & swaps and daily compounding. Thirdly, don't underestimate the general knowledge sharing within the retail investment community. We are not all "apes" "YOLOing" into "meme stonks" and NFTs. There is a large and growing community of retail investors who are becoming increasingly sophisticated, and I am certain that restricting access to more sophisticated investment vehicles will harm that trend of increasing main street sophistication. Anyone can learn anything for free on the internet, and Social Media applications are being used as tools to garner knowledge which inherently teaches us about risks associated with sophisticated investments. Fourthly, it is my view that the plethora of regulatory restrictions put on retail investors does more harm than good. The "Pattern Day Trading" rule can force retail investors to hold investments that are souring that they might have otherwise sold had that rule not existed after acquiring hindsight or as new information becomes available throughout the day. The PDT restrictions (among others) create an unequal playing field inbetween low-income retail investors, high-income retail investors and Wallstreet, and stoke division in an already highly polarized world. We don't need any additional rules for us that do not apply for the more privileged class under the guise of it being to protect ourselves from our own ignorance. This is incredibly insulting to low-income retail investors and harms credibility of regulators and institutions. In summary, especially after considering there are more arguments in addition to what I have listed here, there are a plentiful amount of reasons why more regulations are not necessary. Not only are they not necessary, but it is my view that they will do more harm than good. Regulators need to listen to retail investors' druthers instead of wrongly and insultingly attempting to save ourselves from ourselves.