ETFs: Please Drink Responsibly 2

I’ve read a lot of bad press lately regarding ETFs, and particularly levered ETFs. There seems to be a backlash on the use of volatile, levered ETFs as a way to build long-term wealth.

Well, to this sentiment I say, duh!

Some ETFs and, in particular, those that are levered two and three times, are not intended to be used as long-term wealth builders. These ETFs are trading vehicles, pure and simple. They should be used with a restricted time frame of anywhere from a few weeks to a few months tops.

These volatile, levered ETFs are not buy-and-hold investment vehicles, nor are they to be used for the average risk-averse investor seeking long-term gains. Rather, they only should be used by the highly risk tolerant, and by those willing to employ strict stop losses, as well as those unafraid to take a loss if things go south.

So please, you people in the financial media, don’t continue scaring investors into thinking that levered ETFs are inherently intoxicating. If you drink them responsibly, you’ll reap the pleasures and avoid the hangover.