Money Stuff: The Podcast Fruitcakes and Nutcases: ETF, ATIC, DJT
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Sep 6, 2024 Dive deep into the intriguing world of single-stock leveraged ETFs and their risks, especially with powerful examples like MicroStrategy and NVIDIA. Explore the tumultuous state of Trump’s media venture and its dramatic stock decline. Discover the challenges faced by insurance companies in Florida and New York, as they navigate financial instability. The hosts also inject humor while discussing their vacation plans and invite listeners to send in questions for an engaging mailbag session!
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Leveraged ETFs as Retail Leverage
- Leveraged single-stock ETFs are essentially retail leverage products.
- They offer a way to multiply daily stock returns without traditional margin accounts.
MicroStrategy ETF Paradox
- MicroStrategy's 3x leveraged ETF dropped 80% despite the stock rising 110%.
- This is due to daily rebalancing and volatility drag, particularly affecting volatile stocks like MicroStrategy.
Market Inefficiency and Retail Investors
- Cliff Asness argues that market inefficiency is driven by retail investors chasing speculative highs.
- He cites leveraged single-stock ETFs as evidence, referencing Katie Greifeld's article.