Mar. 17, 2020
Comment on SEC Proposed Rule #S7-24-15: IMHO, there is no better investment for a retirement account than a 2x, 3x ETF Bull. SOXL is currently about $165, but it's 52wk-high was $331. SOXS is currently about $30, but it's 52wk-low was $16.20. If you had bought 500 sh of SOXL then it would've cost $165K. If you had bought 5000 sh of SOXS it would've cost $75K. How many people can convert their 401K into $240K IRA worth of these two? We are in an epidemic fear inducing selloff period & yet look at this portfolio. The S&P dropped over 20% from it's high in this time & yet this IRA would be $82K of SOXL & $150K of SOXS or $232K total. That's just a 3% drop! Now consider someone doing it today. With SOXL being roughly 5x more than SOXS you would buy 500 sh of SOXL & 2500 of SOXS. That would cost $82.5K + $75K or $158K. When SOXL returns it it's high of $331 that would be worth $166K & the SOXS would be worth $35K. The total would be $201K or a net gain of 27%! The SEC should be promoting this strategy instead of making it harder! The best way to do that is to make use of alerts in online trading that the purchase of leveraged Bulls hould be accompanied with the purchase of leveraged Bears. You can even use an example like this if you want in the alert. For more personalized trading a broker can easily discuss such strategies with the investor. in addition the IRA investor should have access to both sell covered & uncovered options for these ETFs. Since markets have far more Bull periods than Bear periods the most effective strategy the Bear is typically far less costly than the Bull. Therefore the IRA investor should sell covered calls for the Bull & uncovered puts for the Bear to even further increase their gains & limit their losses. With the entitlement programs both under heavy burdens & likely to run out of money in the near future it is FAR MORE IMPORTANT for the nation to inform retail investors of these strategies rather than make it more burdernsome & difficult to implement them.