Is There a Volatility Drag in Leverage ETFs?

In inverse funds, the daily leverage gets reset and it starts to compound. If Tesla goes down 20% and you were right, your return isn't 40% on a two times leveraged inverse ETF. So I would use these on a short-term basis,. Same thing with leverageETFs and inverse Funds: The more leverage, the more volatility drag.

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IN THIS EPISODE, YOU’LL LEARN:

08:42 - How index funds affect the underlying companies’ stock prices.
21:31 - What single-stock ETFs are, what investors should know about these products.
24:11 - Are inverse ETFs a good way to bet against the market?
24:11 - The risks of using leveraged ETFs and why they may not perform as you expect.
29:17 - Why passive indexing is sometimes viewed as “weak hands” or “dumb money”.
36:34 - Are we in a passive indexing bubble?
48:53 - Eric’s thoughts on Cathie Wood’s criticisms of ETFs calling them a “misallocation of capital”.
50:54 - Is now the worst time to be a passive index investor?
And much, much more!

*Disclaimer: Slight timestamp discrepancies may occur due to podcast platform differences.

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Related Episode: The Bogle Effect w/ Eric Balchunas - MI167.

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