Gyroscopic Investing

You absolutely have to avoid long positions in 2X and 3X leveraged and inverse ETFs or ETNs... due to the DECAY phenomenon. Intraday is OK, going long is not.

Look at the first chart shown, it will frighten you to DEATH.

http://seekingalpha.com/article/104703- ... raged-etfs

Leveraged ETF's won't give you 2X or 3X but they can be held long term.  Inverse leveraged ETF's are of course horrible. 

http://ddnum.com/articles/leveragedETFs.php

(I couldn't see ochotona's article cause I don't have  password, pardon if it's mentioned there)
but a point against levered ETFs would be sheer bad luck (the sequence of returns) . Imagine a month in the red for more than half of the trading days.

No one seems to talk about it, but it probably accounts for much more of a fund's performance than management fees or stock choice etc.

On thing I tried in the past, with some success (ON PAPER) was to take advantage of the decay factor by shorting both UCO and SCO (2x oil ETFs)  I did not do it long term, but theoretically, being short both took advantage of the decay, and they otherwise offset themselves.  Problem was a lot of these combos, one or both sides are usually "hard to borrow" exposing you to added fees to hold them short, so in the end it wasn't worth doing it for real.

ochotona wrote: You absolutely have to avoid long positions in 2X and 3X leveraged and inverse ETFs or ETNs... due to the DECAY phenomenon. Intraday is OK, going long is not.

Look at the first chart shown, it will frighten you to DEATH.

http://seekingalpha.com/article/104703- ... raged-etfs

Yep, check out my horror show:

https://finance.yahoo.com/echarts?s=GAZ ... 2linear%22}

I keep it around as a reminder.

Geez...read my VP posts on this issue.