May 11, 2020
Dear Ms. or Sir, I am not a super sophisticated investor. But I still appreciate the complexities of leveraged funds and find them useful in that I can take the size position I think is appropriate, in the case of leveraged funds, that only puts half of my money in danger in case something drastic occurs and my money becomes somehow tied up and inaccessible. This happened to 2 of my friends who are investor/traders in 2008. It was 2 years before they got their money back and not all of it was returned to them because they had become locked Into positions they could not liquidate due to no access.
Inverse funds help me to profit if I believe that the market is going down. "Believe" is maybe not the correct word as I have a few tools that I use to indicate to me which way is market direction.
I use inverse funds to trade a downward heading market. These are very useful to a small investor who either cannot or doesn't wish to trade options. Their convenience makes them safer, in my opinion, than shorting or options.
When I re-read my email I see that I do not make a particularly strong case for keeping the inverse and leveraged funds available to the general public without going through an onerous scrutinizing process. But think of it this way: it's a couple more tools in the box for those of us who are of limited means and can use any inexpensive and less risky avenues to participate in the markets.
Thank you for your time. Sincerely, Daniel Hershberger