11Mes·

Stupid Question:

Why cant this plan work in next 5 to 10 years?

Buy $3USL (-4,39%) at current avg 50 price.

Hold till next crisis when prices traded for above 1000.

Get profits on the thousands percent.

I know it must sound a dumb question in many ways but...making my first steps here.

6 Commenti

RandomDude@randomdude

11Mes

How do you know when the crisis is there?

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RandomDude@randomdude

11Mes

@randomdude And how do you know when it’s over?

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RandomDude@randomdude

11Mes

@randomdude And why doesn’t everybody buy leveraged securities?

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Luis@value_seeker_309

11Mes

@randomdude first and foremost, thank you for replying. I really need someone who gives a good reason why not make this investment. Let me reply to your 3 questions:

Question 1: the point is if the cost of mantaining this shares ir 3% a year in product costs and if you look to last crisis where stock was traded around 100 dollars then knowing when the crisis will burst is not a fundamental question. It will happen, market corrections will happen. And when it happens, profits will kick in like crazy. (according to my knowledge which is very very minimal)

Question 2: Knowing when the crisis has passed is also not a problem. Just sell the shares when it reaches the 1000%s .

Question 3:

My only 2 doubts are: 1. will there be volatility at such high pricing and 2. is there any other cost im not seeing.

And also yes your last question makes absolute sense: why is not everyone buying a small percentage of their portfolio when the "apparent" possible profits are so outrageously big.

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P.@growth_ninja_kixmn

6Mes

Sorry for digging up old stuff, but I think this was meant to be posted on some kind of VIX short factor derivative (judging from other posts of the user). And yes, in a nutshell that's a viable strategy. If you time it well after the spike in volatility that comes with a drawback and get out at a good point. But for the points others have pointed out, it requires good timing and is a risky business. If the VIX happens to go up by one over your factor one day you essentially sit on a total loss. So you should employ proper risk management.

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P.@growth_ninja_kixmn

6Mes

@growth_ninja_kixmn Ah sorry, I guess it was about going long, not short. By the long-term nature of the VIX what I wrote makes more sense to me (and is less risky). But the story is similar modulo sign. Doesn't need a single bad day, three "mildly" bad days in a row can essentially wipe out your position.

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