Greater leverage than x3 and Jim Simons ?

[danyboy7]

I was backtesting some portfolios using a x4 leverage,since circuit breakers start at 20%, a single x4 leveraged Etf would survive (-80%). If you are using a mixed combination with decorrelate assets you could theoretically manage to use a greater leverage (x5 or also x6 here https://www.portfoliovisualizer.com/bac ... mbol14=QQQ)
According to PV,those portfolios delivered amazing performances https://www.portfoliovisualizer.com/bac ... mbol14=QQQ
A x4 leveraged portfolio seems to be a War Machine
Is there any way to achieve greater leverage than 3,without using options or margin accounts ? Maybe we should ask to Etf Houses to start delivering those products
I suspect Jim Simons at Medallion Fund is using heavily leveraged ETFs (secret and obviously not available to retails ) to achieve the 66% anually CAGR. Never trusted all that cra..p about recruiting mathematical geniuses (https://en.wikipedia.org/wiki/Long-Term ... Management), quant trades (lol) and high frequency trades. It is statistical that a high number of trades delivers a much poorer performance than a simple buy and hold

[snailderby]

ForceShares wanted to introduce x4 leveraged ETPs a few years ago. As of 2018, the SEC (Securities and Exchange Commission) was still reviewing (and requesting comments on) this proposal. See https://www.sec.gov/rules/sro/nysearca/ ... -84676.pdf. I'm not sure what happened after that.

I would echo the comments of other posters, warning you not to (1) rely too much on overfitted backtests, (2) be overconfident in your investing abilities, or (3) take on too much risk with leveraged products.

[danyboy7]

ForceShares wanted to introduce x4 leveraged ETPs a few years ago. As of 2018, the SEC (Securities and Exchange Commission) was still reviewing (and requesting comments on) this proposal. See https://www.sec.gov/rules/sro/nysearca/ ... -84676.pdf. I'm not sure what happened after that.

I would echo the comments of other posters, warning you not to (1) rely too much on overfitted backtests, (2) be overconfident in your investing abilities, or (3) take on too much risk with leveraged products. But I feel like we're talking to a brick wall.

Great post,thanks
A leveraged well balanced x4 portfolio seems to be sustainable
Backtests of leveraged x3 portfolios show a very good tracking of the real etfs
I'm wondering why it is taking so long to approve those etfs.....wait I know why

[SteelyEyed]

You could take a cash-out refinance at 3% and buy 3X ETFs. Even better, put the loan proceeds into a margin account, borrow as much as possible, and then buy 3X ETFs.

[000]

You could take a cash-out refinance at 3% and buy 3X ETFs. Even better, put the loan proceeds into a margin account, borrow as much as possible, and then buy 3X ETFs.

You forgot borrowing from family and friends.

[brad.clarkston]

You could take a cash-out refinance at 3% and buy 3X ETFs. Even better, put the loan proceeds into a margin account, borrow as much as possible, and then buy 3X ETFs.

You forgot borrowing from family and friends.

When I read these "leveraged" threads I assume most of the comments is sarcasm but then I have to stop and think ... who knows with the idle rich?

[000]

I was backtesting some portfolios using a x4 leverage,since circuit breakers start at 20%, a single x4 leveraged Etf would survive (-80%). If you are using a mixed combination with decorrelate assets you could theoretically manage to use a greater leverage (x5 or also x6 here https://www.portfoliovisualizer.com/bac ... mbol14=QQQ)
According to PV,those portfolios delivered amazing performances https://www.portfoliovisualizer.com/bac ... mbol14=QQQ
A x4 leveraged portfolio seems to be a War Machine
Is there any way to achieve greater leverage than 3,without using options or margin accounts ? Maybe we should ask to Etf Houses to start delivering those products
I suspect Jim Simons at Medallion Fund is using heavily leveraged ETFs (secret and obviously not available to retails ) to achieve the 66% anually CAGR. Never trusted all that cra..p about recruiting mathematical geniuses (https://en.wikipedia.org/wiki/Long-Term ... Management), quant trades (lol) and high frequency trades. It is statistical that a high number of trades delivers a much poorer performance than a simple buy and hold

OP, I think this would be a good starting point. Enjoy!

[danyboy7]

You could take a cash-out refinance at 3% and buy 3X ETFs. Even better, put the loan proceeds into a margin account, borrow as much as possible, and then buy 3X ETFs.

As I said before, I'm not interested in using margin account.
In order to achieve a 66% CAGR for 30 years,he must be using leveraged etfs. I suspect he has access to secret leveraged funds (x4,x5 or higher) not available for retails.I'm not buying the crap.py theory that he is doing arbitrage on canadian banks with a squad of math geniuses lol . There is no way to achieve a such consistant big return by trading stock banks,you must be a fool to trust this yoke and those easily falsifiable snapshots of Medallion holdings.
Of course SEC doesn't have the interest to speedy the approval of that security
Hedgefundie or All Weather heavily leveraged do achieve similar returns of Medallion Fund
Jimmy,I got you
And pay taxes for god's sake,you're bilionaire

[David Jay]

In order to achieve a 66% CAGR for 30 years,he must be using leveraged etfs. I suspect he has access to secret leveraged funds (x4,x5 or higher) not available for retails.I'm not buying the crap.py theory that he is doing arbitrage on canadian banks with a squad of math geniuses lol . There is no way to achieve a such consistant big return by trading stock banks,you must be a fool to trust this yoke and those easily falsifiable snapshots of Medallion holdings.

Boy, do you ever have Jim’s number. There’s no quant involved, just 3x leveraged ETFs. Who’da thunk it.

[David Jay]

”The first leveraged ETF was released by ProShares in 2006.”

I wonder how Jim Simons managed to get along for the first 14 years...

Sorry Dany, but you are approaching Dunning-Kruger territory with this line of thinking. You have “scaled the mountain”, as it were.

[snailderby]

Are you seriously suggesting that Jim Simons, Renaissance Technologies, and the Medallion Fund (1) are falsifying their reported holdings and (2) using super-secret leveraged ETFs that no one else has access to? And your support for that theory is simply that their returns are too good to be true, so this is the only way they could have achieved such good returns?

[keith6014]

You can get 5x leverage from S&P Emini Micro contracts. You can get even more if have the money for ES.

I would be very interested in a 5x leveraged ETFs. I suppose you can buy a 3x ETF and buy a 50% deep ITM LEAP call. I am too much off a wuss for that because they are expensive!

[1130Super]

You could take a cash-out refinance at 3% and buy 3X ETFs. Even better, put the loan proceeds into a margin account, borrow as much as possible, and then buy 3X ETFs.

You forgot borrowing from family and friends.

And CC’s

[nisiprius]

Is it actually possible to have such a thing as a secret ETF? Wouldn't the necessary SEC filings spill the beans?

[flyingcows]

I doubt any of the professional investors would use leveraged ETFs, why would they? They could simply buy the underlying derivatives (Options or Futures) which compose a leveraged ETF and dial in whatever risk/reward they are looking for.

An “investor” could dial in much more leverage than 3x purchasing long puts/call options near expiration, a weekly option purchased out of the money could give you around 10-20x leverage depending on how far out of the money your strike is, of course your odds of success on this would be very low, this would be like buying lottery tickets and a quick way to go broke.

Also if that is not enough, with a portfolio margin account, long options are marginable.

[glorat]

I doubt any of the professional investors would use leveraged ETFs, why would they? They could simply buy the underlying derivatives (Options or Futures) which compose a leveraged ETF and dial in whatever risk/reward they are looking for.

An “investor” could dial in much more leverage than 3x purchasing long puts/call options near expiration, a weekly option purchased out of the money could give you around 10-20x leverage depending on how far out of the money your strike is, of course your odds of success on this would be very low, this would be like buying lottery tickets and a quick way to go broke.

Also if that is not enough, with a portfolio margin account, long options are marginable.

+1

It seems that buying long options achieves all of OPs goals, if I have understood them right

• Control over leverage multiplier (3x, 5x or more)
• Do not have to be a "professional" investor
• No ETF fees to purchase options for you
• Never have a short position in anything so...
• No use of margin, no margin calls, not risk of anything more than the capital put up
• High availability and liquidity, especially for leveraged equities (I have less knowledge on the availability/liquidity of government bond options though)

OP doesn't want to use Options (and instead buy ETFs that have the options) but I don't know why that is, especially in view of all the benefits that fit his wishes.

[danyboy7]

Are you seriously suggesting that Jim Simons, Renaissance Technologies, and the Medallion Fund (1) are falsifying their reported holdings and (2) using super-secret leveraged ETFs that no one else has access to? And your support for that theory is simply that their returns are too good to be true, so this is the only way they could have achieved such good returns?

By falsfying I mean that he is buying random things just before the snapshot and selling them just after it in order to sell hopium about the "mathematician geniuses" stuff. And yes,the second point is what I mean

[danyboy7]

”The first leveraged ETF was released by ProShares in 2006.”

I wonder how Jim Simons managed to get along for the first 14 years...

Sorry Dany, but you are approaching Dunning-Kruger territory with this line of thinking. You have “scaled the mountain”, as it were.

Released to the public

[danyboy7]

I doubt any of the professional investors would use leveraged ETFs, why would they? They could simply buy the underlying derivatives (Options or Futures) which compose a leveraged ETF and dial in whatever risk/reward they are looking for.

An “investor” could dial in much more leverage than 3x purchasing long puts/call options near expiration, a weekly option purchased out of the money could give you around 10-20x leverage depending on how far out of the money your strike is, of course your odds of success on this would be very low, this would be like buying lottery tickets and a quick way to go broke.

Also if that is not enough, with a portfolio margin account, long options are marginable.

+1

It seems that buying long options achieves all of OPs goals, if I have understood them right

• Control over leverage multiplier (3x, 5x or more)
• Do not have to be a "professional" investor
• No ETF fees to purchase options for you
• Never have a short position in anything so...
• No use of margin, no margin calls, not risk of anything more than the capital put up
• High availability and liquidity, especially for leveraged equities (I have less knowledge on the availability/liquidity of government bond options though)

OP doesn't want to use Options (and instead buy ETFs that have the options) but I don't know why that is, especially in view of all the benefits that fit his wishes.

It's not even close. Using options requires an active continuous management. And how about the quarterly rebalancing ? and buying and selling options taxation ? It's not even close to having an actual leveraged etf for BHR aka buy-hold-rebalance.

[zarci]

OP, why do you want to achieve 66% CAGR?

[danyboy7]

OP, why do you want to achieve 66% CAGR?

I'm not buying the hopium that Simons is selling to us
There is no way MR market is so inefficient that with some trades you get a 66% average net cagr , moreover using a relatively huge ammount of money as Medallion fund contains.
Furthemore his claim of that Cagr seems to be a fraud too,see the recent taxes avoiding issues of that fund
A leveraged x7 Hedgefundie 40:60 stock-bonds has delivered a 40,27% cagr since 1987. Heavily leveraged portfolios must be the way to his "secret".

[danyboy7]

You can get 5x leverage from S&P Emini Micro contracts. You can get even more if have the money for ES.

I would be very interested in a 5x leveraged ETFs. I suppose you can buy a 3x ETF and buy a 50% deep ITM LEAP call. I am too much off a wuss for that because they are expensive!

Me too my friend but SEC is sleeping on their approval and something makes me believe those products won't be delivered any soon . As it was sleeping here https://nypost.com/2019/04/10/hedge-fun ... rs-report/

[Schlabba]

OP, why do you want to achieve 66% CAGR?

I'm not buying the hopium that Simons is selling to us
There is no way MR market is so inefficient that with some trades you get a 66% average net cagr , moreover using a relatively huge ammount of money as Medallion fund contains.
Furthemore his claim of that Cagr seems to be a fraud too,see the recent taxes avoiding issues of that fund
A leveraged x7 Hedgefundie 40:60 stock-bonds has delivered a 40,27% cagr since 1987. Heavily leveraged portfolios must be the way to his "secret".

I think the question was why do you need a 66% cagr? What are your financial goals?

‘Most of us’ here invest so they can be financially independent so they could retire if they wish. I could imagine investing for an expensive purchase like a house, sending your kids to an expensive university or some expensive hobby.

[danyboy7]

OP, why do you want to achieve 66% CAGR?

I'm not buying the hopium that Simons is selling to us
There is no way MR market is so inefficient that with some trades you get a 66% average net cagr , moreover using a relatively huge ammount of money as Medallion fund contains.
Furthemore his claim of that Cagr seems to be a fraud too,see the recent taxes avoiding issues of that fund
A leveraged x7 Hedgefundie 40:60 stock-bonds has delivered a 40,27% cagr since 1987. Heavily leveraged portfolios must be the way to his "secret".

I think the question was why do you need a 66% cagr? What are your financial goals?

‘Most of us’ here invest so they can be financially independent so they could retire if they wish. I could imagine investing for an expensive purchase like a house, sending your kids to an expensive university or some expensive hobby.

It's not relevant imho.Once you achieve those returns,you could do anything you wish.
I'm willing to use a 10% of my capital in a leveraged portfolio,trying to find a safe way to achieve a heavy leverage too.At cagr>20% even a 10% of your total sum could grow in a tremendous way.

[zarci]

What makes you believe a fund with more leverage would not display an even higher amount of volatility?

You links allocate 400% to index funds and then subtracts 300% in CASHX. This is a nifty way of attempting to backtest a leveraged allocation, but it completely misses the additional risks that would be introduced due to leverage.

That is to say, if you find a magical way to leverage ETFs without introducing risks such as volatility decay, then yes you could achieve gargantuan returns.

But do not expect holding those recent leveraged ETFs for longer periods of time will return anything similar to those backtests with any degree of reasonable certainty. It's a mathematical impossibility.

Those backtests imply that you would trade the index fund using 400% leverage on a margin basis.

[zarci]

Also note that the volatility introduced in holding leveraged ETFs over a longer period of time can very well work against you.

https://www.bogleheads.org/wiki/Leverag ... verse_ETFs

Also read this more detailed explanation of Volatility decay:

https://seekingalpha.com/article/167772 ... lity-decay

[danyboy7]

What makes you believe a fund with more leverage would not display an even higher amount of volatility?

You links allocate 400% to index funds and then subtracts 300% in CASHX. This is a nifty way of attempting to backtest a leveraged allocation, but it completely misses the additional risks that would be introduced due to leverage.

That is to say, if you find a magical way to leverage ETFs without introducing risks such as volatility decay, then yes you could achieve gargantuan returns.

But do not expect holding those recent leveraged ETFs for longer periods of time will return anything similar to those backtests with any degree of reasonable certainty. It's a mathematical impossibility.

Those backtests imply that you would trade the index fund using 400% leverage on a margin basis.

Backtest of Hedgefundie with Cashx vs backtest using UPRO and TMF shows a great tracking,the difference is minimal.Do it yourself to see that

[zarci]

And so I did.

Comparison between UPRO / TMF versus your leveraged proposition during the past ten years:

https://www.portfoliovisualizer.com/bac ... on5_2=-200

Ignoring UPRO / TMF to obtain a logner time period:

https://www.portfoliovisualizer.com/bac ... on5_1=-200


Your backtests are based on a period of 10 years that did not display any serious downward trends like 2008 for example. Even march of this year is relatively tame when compared to volatility that could be expected over longer periods of time. This really seems like a bad case of recency bias.

In other words; If you had employed Hedgefundie's strategy the day UPRO was released, stayed the course and sold it yesterday you would have made exceptional returns.

It is unlikely to perform like that in the future.

That being said, If you find someone willing to lend you 10x your net worth under the following assumptions;

• The loan is not callable
• The interest rate is <1%
• No monthly payments are required to be made
• The lender is willing to part with this loan for 40 years

Then you could do great things with that leverage. You could leverage upwards, as you suggest. Or potentially use a more bond-heavy strategy to obtain the same return of a riskier portfolio at lower volatility levels.

Another name for such a loan would be a gift.

That being said, I have no intention of debating the odds of success of your strategy. All the best to you and good luck.


EDIT: 10x leverage clearly beats Jim Simmons - > 100% CAGR!:

https://www.portfoliovisualizer.com/bac ... on5_3=-900

[danyboy7]

I strongly believe LTCM and Medallion do have a lot of analogies.LTCM before the liquidity crysis was delivering a 40% cagr,similar return to Medallion.LTCM was obviously too much overleveraged (x25 at the beggining,with capital escape it reached x250) but using a decent leveraged (maximum x10 imho) someone could achieve similar result to the Renaissance fund.

[danyboy7]

EDIT: 10x leverage clearly beats Jim Simmons - > 100% CAGR!:

https://www.portfoliovisualizer.com/bac ... on5_3=-900

You need to backtest it since 1986.I've found that that the maximum optimal leverage for HF is x7. Anything higher would not survive or it would deliver sloopy performances.
I'm not interested in HF,it was for sake's example. I do believe a well balanced heavily leveraged portfolio is the key for achieving those consistant returns.

[danyboy7]

https://www.barrons.com/articles/wheee- ... 1493832207
https://www.etftrends.com/leveraged-inv ... doing-ytd/
I don't understand,here it is written that ETF sp500 x4 leveraged ticker UP has been approved but according to others it still must be approved. Any thoughts on how could we request a Long Treasury x4 version ? I would need also a Intermediate Treasury x4 version and a Gold one
Do we have to write a mail to SEC,call them or something similar

[David Jay]

I don't understand,here it is written that ETF sp500 x4 leveraged ticker UP has been approved...

Just because ForceShares applied for and received approval does not mean they will actually launch the product. They may have gotten cold feet after the 77% drop in UPRO in February and March.

Since it has been approved, perhaps your urging could prompt ForceShares to launch the product. Maybe them a call...

Any thoughts on how could we request a Long Treasury x4 version ? I would need also a Intermediate Treasury x4 version and a Gold one Do we have to write a mail to SEC,call them or something similar

The SEC does not create financial products. Private companies create products and submit them to the SEC for approval.

[danyboy7]

I don't understand,here it is written that ETF sp500 x4 leveraged ticker UP has been approved...

Just because ForceShares applied for and received approval does not mean they will actually launch the product. They may have gotten cold feet after the 77% drop in UPRO in February and March.

Since it has been approved, perhaps your urging could prompt ForceShares to launch the product. Maybe them a call...

Any thoughts on how could we request a Long Treasury x4 version ? I would need also a Intermediate Treasury x4 version and a Gold one Do we have to write a mail to SEC,call them or something similar

The SEC does not create financial products. Private companies create products and submit them to the SEC for approval.

Yess but in this case the financial product has been already created and it is SEC that has put in pending UP ETF. I will try to email both SEC and ForceShares

[dani_0407]

Is it April in August?

It is a good thread to make a question.

My younger brother and a common friend of us are quite into day trading. They think they can compound the daily gains they may have. To the question I made to them, "how long do you need to double 100 Euro", the answer was "three months" (I think they though they were being conservative in the answer lol). My reply was: "please take a 100 euro from me know, and give me four millions back in 2025 and keep the rest as your commission". Not even then I was able to convince them the whole thing does not make (any) sense.

Any advise on how to talk about such issues with younger family members?

[snailderby]

https://www.barrons.com/articles/wheee- ... 1493832207
https://www.etftrends.com/leveraged-inv ... doing-ytd/
I don't understand,here it is written that ETF sp500 x4 leveraged ticker UP has been approved but according to others it still must be approved. Any thoughts on how could we request a Long Treasury x4 version ? I would need also a Intermediate Treasury x4 version and a Gold one
Do we have to write a mail to SEC,call them or something similar

After the publication date of the Barron's article that you linked to, the SEC decided to reconsider its decision to approve the ForceShares ETF: https://www.reuters.com/article/us-sec- ... SKCN18C2RO. Like I mentioned in my first post, as of 2018, the SEC was still reviewing this proposal. I don't know what happened after that.

[danyboy7]

https://www.barrons.com/articles/wheee- ... 1493832207
https://www.etftrends.com/leveraged-inv ... doing-ytd/
I don't understand,here it is written that ETF sp500 x4 leveraged ticker UP has been approved but according to others it still must be approved. Any thoughts on how could we request a Long Treasury x4 version ? I would need also a Intermediate Treasury x4 version and a Gold one
Do we have to write a mail to SEC,call them or something similar

After the publication date of the Barron's article that you linked to, the SEC decided to reconsider its decision to approve the ForceShares ETF: https://www.reuters.com/article/us-sec- ... SKCN18C2RO. Like I mentioned in my first post, as of 2018, the SEC was still reviewing this proposal. I don't know what happened after that.

Yes,we retails need to make them wake up .Some of us would be very interested in this kind of products.Does anyone have the mail of Forceshares ? Didn't find anything online

[snailderby]

I saw this post in another thread and thought it might be worth repeating here:

One of the most dangerous places to be as an investor is when you’re the smartest person in the room. Smarts, when not combined with a heavy dose of humility, can get you into trouble because it can lead to overconfidence. Overconfidence can lead to overthinking which can be a deadly combination when managing money.

The best example of this is the case of Long-Term Capital Management, the hedge fund that blew-up in the late-1990s run by a group of PhDs, Nobel Laureates and traders. Of the many glaring mistakes that were made by this fund — enormous amounts of leverage, an over-reliance on mathematical risk models, overconfidence, no margin of safety — maybe the most underrated risk is that they expected the future to play out just like the past.

They failed to allow for outlier events or even the possibility that the past doesn’t represent a perfect blueprint for the future.

Source: https://awealthofcommonsense.com/2016/0 ... it-simple/

In many areas of life, investing included, it's easy for people to fall prey to Dunning-Kruger effect, where people are unable to recognize their own lack of ability: https://en.wikipedia.org/wiki/Dunning%E ... ger_effect. A 2012 study conducted by FINRA found that people who had recently filed for bankruptcy were more likely than their peers to rate themselves as very financially knowledgeable.

Another article from A Wealth of Common Sense notes that:

...it’s very easy to find the mistakes that other people make, but very difficult to see those same mistakes in our own actions. Everyone else is an idiot, but surely not me. Here are a few suggestions from Dunning on ways to overcome this crippling mindset:

• Be your own devil’s advocate.

• Ask yourself how you might be wrong.

• Imagine what could lead to failure based on your decision.

• Seek out advice from others.

And finally, it’s not the end of the world to say “I don’t know” every once and a while . . . .

Source: https://awealthofcommonsense.com/2014/1 ... dont-know/

[danyboy7]

I saw this post in another thread and thought it might be worth repeating here:

One of the most dangerous places to be as an investor is when you’re the smartest person in the room. Smarts, when not combined with a heavy dose of humility, can get you into trouble because it can lead to overconfidence. Overconfidence can lead to overthinking which can be a deadly combination when managing money.

The best example of this is the case of Long-Term Capital Management, the hedge fund that blew-up in the late-1990s run by a group of PhDs, Nobel Laureates and traders. Of the many glaring mistakes that were made by this fund — enormous amounts of leverage, an over-reliance on mathematical risk models, overconfidence, no margin of safety — maybe the most underrated risk is that they expected the future to play out just like the past.

They failed to allow for outlier events or even the possibility that the past doesn’t represent a perfect blueprint for the future.

Source: https://awealthofcommonsense.com/2016/0 ... it-simple/

In many areas of life, investing included, it's easy for people to fall prey to Dunning-Kruger effect, where people are unable to recognize their own lack of ability: https://en.wikipedia.org/wiki/Dunning%E ... ger_effect. A 2012 study conducted by FINRA found that people who had recently filed for bankruptcy were more likely than their peers to rate themselves as very financially knowledgeable.

Another article from A Wealth of Common Sense notes that:

...it’s very easy to find the mistakes that other people make, but very difficult to see those same mistakes in our own actions. Everyone else is an idiot, but surely not me. Here are a few suggestions from Dunning on ways to overcome this crippling mindset:

• Be your own devil’s advocate.

• Ask yourself how you might be wrong.

• Imagine what could lead to failure based on your decision.

• Seek out advice from others.

And finally, it’s not the end of the world to say “I don’t know” every once and a while . . . .

Source: https://awealthofcommonsense.com/2014/1 ... dont-know/

Very informative and thanks a lot.But returning to my question,is there a way to contact ForceShares ? I didn't find any website

[muffins14]

It feels odd that you're so desperate to get your hands on a 4x + leverage ETF for 10% of your portfolio.

Why not:
a) invest in a 2x ETF with 20% of your portfolio?
b) invest in NTSX (90% S&P + 60% bonds) with 94% of your portfolio?
c) invest in PSLDX with 60-70% of your portfolio?
d) use options?
e) spend this time working harder to get a higher-paying job?

[danyboy7]

It feels odd that you're so desperate to get your hands on a 4x + leverage ETF for 10% of your portfolio.

Why not:
a) invest in a 2x ETF with 20% of your portfolio?
b) invest in NTSX (90% S&P + 60% bonds) with 94% of your portfolio?
c) invest in PSLDX with 60-70% of your portfolio?
d) use options?
e) spend this time working harder to get a higher-paying job?

It's not desperation....it's the desire to achieve what I define a good performance.Investing for example only in unleveraged sp500 is not good enough for me.You won't get the same outcome by using x4 leveraged and using a x2 one combined with doubling money. Option e) is already achieved.

[muffins14]

And it's completely unacceptable to use 3x leverage with 13.3% of your portfolio rather than use 4x leverage with 10% of your portfolio?

[danyboy7]

And it's completely unacceptable to use 3x leverage with 13.3% of your portfolio rather than use 4x leverage with 10% of your portfolio?

Any leveraged portfolio is much better than its unleveraged twin. See standard 60/40 vs HF or Golden Butterfly x3 vs normal one. The more heavy is the leverage,the better result you get.Of course you should be aware of risks and use only a small part of your total capital.

[fwellimort]

And it's completely unacceptable to use 3x leverage with 13.3% of your portfolio rather than use 4x leverage with 10% of your portfolio?

Any leveraged portfolio is much better than its unleveraged twin. See standard 60/40 vs HF or Golden Butterfly x3 vs normal one. The more heavy is the leverage,the better result you get.Of course you should be aware of risks and use only a small part of your total capital.

Correction. Any leveraged portfolio in a bull market in which returns are higher than the rate of margin/fees is better than an unleveraged portfolio (as long as the market goes up in a rather predictable fashion).

Leveraging outside US market in the past could have been completely devastating. Let's not use the US stock market as the example for all stock markets.
Anyways, there's nothing wrong with leveraging if that's your risk appetite. You can always borrow on margin from your brokerage to emulate a 4x leverage yourself.
m1finance and interactive brokers offer very low margin rates. Or just purchase futures yourself.

Just don't blame me if anything unfortunate happens. I'm just saying you could emulate 4x through your own means.

[snailderby]

And it's completely unacceptable to use 3x leverage with 13.3% of your portfolio rather than use 4x leverage with 10% of your portfolio?

I'm curious about this too. If your goal is to lever your portfolio by roughly 130% (4x leverage on 10% of your portfolio + unlevered 90%), there are many ways to get there without having access to 4x levered ETFs.

[danyboy7]

And it's completely unacceptable to use 3x leverage with 13.3% of your portfolio rather than use 4x leverage with 10% of your portfolio?

Any leveraged portfolio is much better than its unleveraged twin. See standard 60/40 vs HF or Golden Butterfly x3 vs normal one. The more heavy is the leverage,the better result you get.Of course you should be aware of risks and use only a small part of your total capital.

Correction. Any leveraged portfolio in a bull market in which returns are higher than the rate of margin/fees is better than an unleveraged portfolio (as long as the market goes up in a rather predictable fashion).

Leveraging outside US market in the past could have been completely devastating. Let's not use the US stock market as the example for all stock markets.
Anyways, there's nothing wrong with leveraging if that's your risk appetite. You can always borrow on margin from your brokerage to emulate a 4x leverage yourself.
m1finance and interactive brokers offer very low margin rates. Or just purchase futures yourself.

Just don't blame me if anything unfortunate happens. I'm just saying you could emulate 4x through your own means.

-"Correction. Any leveraged portfolio in a bull market in which returns are higher than the rate of margin/fees is better than an unleveraged portfolio (as long as the market goes up in a rather predictable fashion)"
Not quite.See the backtesting of leveraged portfolios,they have done much better even if there were a BEAR market.See Hedgefundie or All Season x3 version
-"m1finance and interactive brokers offer very low margin rates. Or just purchase futures yourself."
I'm european,our laws and brokers pretty s*cks. You don't have an idea of how lucky are you as an American....things like M1finance are science-fiction......US is way many years ahead us.

[000]

Which is more efficient?

Option 1: 10% at 4x + 90% at 1x
Option 2: 100% at 1.3x

[nullisland]

The Medallion fund is heavily leveraged. It’s estimated that they average 12.5x leverage, and sometimes go as high as 20x. The secret sauce isn’t the raw returns of the unleveraged trades, it’s the risk-adjusted returns that allow them to lever up so much without going bust.

There’s a recent book about Renaissance called “The Man Who Solved the Market” that has a lot of interesting details about their approach. It’s not something that ordinary investors can replicate.

[David Jay]

The Medallion fund is heavily leveraged. It’s estimated that they average 12.5x leverage, and sometimes go as high as 20x. The secret sauce isn’t the raw returns of the unleveraged trades, it’s the risk-adjusted returns that allow them to lever up so much without going bust.

There’s a recent book about Renaissance called “The Man Who Solved the Market” that has a lot of interesting details about their approach. It’s not something that ordinary investors can replicate.

Dany-boy can, he just needs a few 4x ETFs...