What do you do if you are not concerned with volatility, and are willing to take on even more risk than the stock market has to offer? There are two options: reducing diversification, or using leverage.
References in this episode:
– Life-Cycle Investing and Leverage: Buying Stock on Margin Can Reduce Retirement Risk:
– Lifecycle Investing: A New, Safe, and Audacious Way to Improve the Performance of Your Retirement Portfolio:
– Embedded Leverage:
– Why Do Most Investors Choose Concentration Over Leverage?:
– Leveraged ETF Rebalancing: An ETFdb.com Guide:
Path-Dependence of Leveraged ETF Returns:
——————
Follow Ben Felix on
– Twitter:
– LinkedIn:
Visit Rational Reminder:
Follow the Rational Reminder on:
– Twitter:
Visit PWL Capital:
Follow PWL Capital on:
– Twitter:
– Facebook:
– LinkedIn:
You can find the Rational Reminder podcast on
Google Podcasts:
Apple Podcasts:
Spotify Podcasts:
——————
For the lady point you made: how can "embedded leverage" of a leveraged ETF be "priced in"? How is it priced in? What does this mean in this context?
Hey question, could you create a video on your day to day roles & operation as a portfolio manager? What you do entirely?
Which app in Canada can be used to buy stocks on leverage
And for those who will tolerate even higher risk, you could borrow against your home/margin loan and use the money to buy leveraged ETFs
Legend has it, that this was the last video Bill Hwang ever watched on YT.
Bond index horrible because all the risk, 25% UPRO, 25% TQQQ, 50% cash, rebalance daily if not every 15 minutes
What do you think about leveraging 2X or 3X the All Weather Portfolio by Ray Dalio?
Do you consider 30 year bonds as leveraged instrument?
Introducing margin stocks: what's the quickest way to go brankrupt during a financial turmoil?
I want to add $200 for my bank account and $100 from a margin loan every week
Mate you just kill it! Such articulate and researched work!
Just dont
I know i am late, but what do you think about the paper "Leverage for the Long Run"?
A leveraged etf would still significantly outperform the index in the long term, if it goes up in the long term right? Can the effect of the variance actually make it underperform the index? Are there any examples of this?
For instance, TQQQ (3x nasdaq 100) isn’t exactly 3 x QQQ but still significantly outperformed it despite the volatility and I think despite the expense ratio.
In light of this, wouldn’t it be smart for a risk tolerant long term investor to invest in something like TQQQ, on the assumption that the nasdaq 100 will rise over the next 20-30 years?
Read the Lifecycle investing book. Great read. Now how to get leverage without paying through the nose on interest rates. Pfffffft
That's how i build two solid portfolios. A growth/ tech portfolio and a DGI portfolio.. using leverage. I'm so grateful for the access to margin…
As an addendum, there is an interview with Charlie Munger and he recommends between 100 and 200% leverage in index funds and non risky assets for young people
Looking at NTSX and other wisdom tree core efficiency funds, wpuld that be embedded leverage? Thoae seem to apply a safe optimized risk portfolio and leveraging them in a very cost efficient manner. May only be us market only.
I'd love thoughts on those!
Love your work. I've watched like 25 videos this week alone.
Those bonds didn't work bro.
I am viewing TMF currently. What is considered a long-term hold on these leverage positions/typically too long on average? Does safety change at all when you are viewing a 20 year bond etf versus others? And I understand that nothing is guaranteed thank you for the insight.
I decreased leverage after "holding" a leveraged position during the GFC.
Margin calls make margin loans so safe for the banks i don't understand why they're not incredibly cheap.
Did you not blink a single time during this video? How is that possible?
So if we found a levered etf that rebalances monthly/yearly we would be set?
8:00 I was thinking of going this route. Get my portfolio up to a certain level, then borrow against it after a crash. I predict that the interest that I pay will be less than my gains in the long term by a land slide. Get rich quick by never selling my investments and paying taxes on them. It is kind of like a mortgage method. You buy a house at 100k dollars but you pay 20k out of pocket and pay off the remaining 80, but if the house goes up to 300k, your mortgage is still 100k and you just 3x'd your investment just by taking out a loan instead of saving up the 100k and find out it's too late. Much in the same way, I want to borrow against my portfolio after a market crash and pay off that loan over time after the rebound. Thus I can DCA until a crash, loan, invest the loan, and pay off the loan instead of dca, which would overtime result in less equity for the same amount of money.
Have been holding long on 3X leveraged ETFs since 2009. I retired in 2021 at the age of 43…thank you leverage.
Why cannot ETF company just manually give value equal to exactly 2x asset price, every day? Weather the ETF company even have underlying stocks or not is irrelevant to the buyer?
I am thinking of buying leverage 3x Amazon shares, any thoughts?
Leverage ALWAYS helps higher returns in the long run.