Margin Debt Equals Path To Portfolio Implosion [Dow Jones Industrial Average 2 Minute]

For example, the Direxion Daily Natural Gas Related Bull 3X Shares ETF (NYSEARCA:GASL) lets you invest in rising natural gas prices. If you believe that natural gas prices will rise, then buy the GASL, because GASL shares leverage the increase three times that amount.

As you’d expect, these leveraged ETFs are frequently floated near the apex of a market. This makes them useful contrarian indicators.

As for the Direxion Daily Natural Gas Related Bull 3X Shares ETF, it’s down 97% over past 12 months. Of the 10 worst-performing ETFs compiled by ETFChannel.com, eight are leveraged sector ETFs (with the GASL taking the brass ring for worst performer). So much for betting on conviction.

If you want to stay in the game and build wealth over time, take the unleveraged route by investing only money you have on hand (preferably in safe, income-generating assets). You’ll not only save yourself many sleepless nights, you’ll make more rational investment choices while awake.

Investors under the duress of debt make the least rational choices, thus guaranteeing to elevate a bad situation into a terrible one. Staying solvent is about the best advice anyone can heed. You stay solvent by avoiding debt.

This article is brought to you courtesy of Steve Mauzy From Wyatt Investment Research.

Pages: 1 2

Leave a Reply

Your email address will not be published. Required fields are marked *