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32

Leverage can be good to increase gains, but it amplifies movements of a stock. Also downward movements. Paired with the increased gains is also an increased risk, and that changes the investment vehicle. The goal of an index fund is to passively follow an index as closely as possible. Leverage could reduce tracking error on upward movement, but would ...


5

When the index goes down, leverage will exacerbate the losses instead of offsetting them.


5

What you probably want is a Fee-Only Financial Advisor. You pay them like a consultant and they recommend the best investments they know of given your objectives and level of fear. Their compensation is not tied to commissions on financial instruments they sell you. Which means, they are not recommending lousy investments just because their salary depends on ...


3

An inverse tracker does not necessarily have the inverted long-term return as an equivalent non-inverted tracker. Let's take two tracker, N and I. N is a "normal" tracker and I is an inverse tracker of index X. All three start at a value of 100. On Day 1, X goes up 10% to 110. N also goes up to 100, and I goes down to 90 (-10%). On day 2, X goes ...


1

The Russell 2000 has little to no overlap with the S&P 500, and has a market-cap-weighted ETF with options (IWM), but (as noted by Flux) no longer has an equal-weighted ETF. If you relax the requirement of 2000 or more stocks, the S&P MidCap 400 and S&P SmallCap 600 have equal-weighted ETFs (EWMC and EWSC), but they do not appear to have options. ...


1

There are a few significant questions inherent what you're asking, namely: (1) What tax-efficient vehicles may exist for a US citizen living in UK and likely staying there long term, but maybe returning to the US? This is a very hard problem to answer. Something that could work great if you end up staying in the UK 'till retirement could be bad if your visa ...


1

The market is an auction and its participants determine the price of the security. If they are actively offering better prices, the bid and the ask narrow. If not, they widen to wherever the market maker sets them. So from strike price to strike price, there will be minor deviations. In addition, there will be minor deviations in the value of the SPY and ...


1

Leverage has costs other than movement of the underlying: A leveraged ETF also loses value in response to volatility. Also, your downside risk would be greater than it would otherwise be due to the leverage.


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... how it can be efficiently implemented through deep-in-the money index/ETF options, which can provide this leverage. Such options with the strike price equal approximately to half of the current index value give 2/1 leverage. Buying an option with a strike price of 1/2 the underlying's price is merely an arbitrary number. Let's look at this in a ...


1

If you are new to the world of financial investing, I would suggest using what is called a "systematic investment plan". This comprises investing a fixed sum of money at regular intervals into, for example, a passively managed index fund. For example, you could invest , say, $1000, or any amount of your choosing, every other week into SPY which ...


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