Feb. 09, 2020
Dear SEC, I have been using leveraged ETFs since January 2017. I use them in a long-term strategy where I keep a fraction in the leveraged index fund (E.g. TQQQ) and another fraction in a bond fund (E.g. AGG). I rebalance each quarter according to how much the leveraged fund has increased/decreased. If it has increased more than my target rate (E.g. 9% per quarter), then I sell the extra and put it into the bond fund. If it has increased less than the target rate (or decreased), I use my bond funds to buy the difference. This has worked very well during the last 3 years. This success includes when the market had a sharp downturn in December 2018. At the end of this quarter, my account dropped to approximately 57% of its previous high in September 2018. Although this was difficult to see, I understood in advance that this sort of thing was not only inevitable while using this strategy, but actually a key part of its long-term success. During the first week of January 2019, I sold a large chunk of my bond fund and bought TQQQ, which was in deep discount. I then waited it out. I finally sold a small fraction of the increase this last January 2020, but am still riding the wave and plan to replenish my bond fund over this year in preparation for the next downturn. Of course, I realize some downturns may be both more extreme and longer term. But, nevertheless, I hope this shows that I have a good understanding of what I am doing and am not overly reactive. I have a methodical plan in place. I would also like to point out that I have a PhD in theoretical physics and advanced mathematics. Although I am not trained in finance, directly, and also do not have enough assets (yet) to qualify as an accredited investor, I still have sufficient expertise to use leveraged index funds in my financial plan. I would be very frustrated if the SEC removed that right from me. The modern financial market should be a level playing field, allowing any expert trader, from any background, to participate for maximal gain and achieve financial independence. This right should not be reserved for those who are already wealthy, thus increasing the economic divide. My preference would be that the SEC does not remove my right to use leveraged funds in my portfolio, nor that it forces me to use a financial advisor. Frankly, I do not have confidence in financial advisors, nor should I have to pay a financial advisor to give me bad advice or to act as a middle man for my trades. My plan systematically follows a simple recipe that has a proven track record. If the SEC chooses to put any safeguards in place for leveraged funds, I strongly urge you to create a clear, simple path for traders like me that gives us the right to freely use leveraged funds and does not put a great burden on us for their use. Thank you very much for your time. Best wishes, Neil Christensen Assistant Professor of Physics Illinois State University