Doubling Down is for Wimps: Go for the Triple

December 3, 2008
By seadmin

I’m a big fan of using leverage with my investments. When investing for short-term profits, there’s nothing as good as having a 2-beta fund in your portfolio. What’s a 2-beta fund? It’s a fund — usually an ETF — that moves twice as fast as the underlying index. These 2-beta funds can move in the same direction as an index, or they can move the inverse of a particular index.

But what if you are the impatient, even impetuous type who craves even more leverage? What if there were funds that allowed you to go for a triple play?

Well, you’re in luck. Thanks to ETF issuer Direxion, there are eight new ETFs that are leveraged bull and bear funds designed to seek 300% — yes, that’s 3-beta — of the daily performance, or 300% of the inverse of the daily performance, of the four indexes they track.

Now before we go any further, I want to make sure you understand that 3-beta ETFs should not be viewed as core portfolio holdings. They are too volatile to be used for that purpose.

But if you like to live on the investment edge, and really like to swing for the fences, then the new Direxion funds could be right for at least a small percentage of your trading money.

After all, if you’ve got the temerity to put your chips in the 2-beta pot, then why not take the next step and go for the triple?

Here’s a quick rundown of Direxion’s new 3-beta funds

  • Direxion Large Cap Bull 3X Shares (BGU)
  • Direxion Small Cap Bull 3x Shares (TNA)
  • Direxion Energy Bull 3x Shares (ERX)
  • Direxion Financial Bull 3x Shares (FAS)
  • Direxion Large Cap Bear 3x Shares (BGZ)
  • Direxion Small Cap Bear 3x Shares (TZA)
  • Direxion Energy Bear 3x Shares (ERY)
  • Direxion Financial Bear 3x Shares (FAZ)

Note: A special hat tip goes to my friend Tom Lydon of ETFTrends.com for the heads up on these triple-leveraged ETFs.

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