August 21, 2020
I rely on leveraged funds, such as TQQQ and SPXL, to improve my investment returns without taking single stock risk.
Leveraged funds are especially useful in this way, since one can generate returns superior to the market overall, as well as many individual stocks, but without the risk that comes from the manipulation of individual stocks, or surprise announcements.
See, for example, the one day, 25% price drop that occurred in Enphase Energy (ENPH) on June 17, 2020, because the short selling firm 'Prescience Point Capital Management', released a report accusing Enphase Energy of massive accounting fraud.
I held ENPH through that event, and only sold part of my position after the stock recovered much of that drop, only because I was frustrated by what seemed like manipulation (note there were numerous critics of the quality of the report on ENPH from 'Prescience Point').
Since 3X funds, such as TQQQ, are not more volatile than many individual stocks, it does not make sense to single them out for regulatory restrictions. If investors do not have the knowledge to deal with the risks of 3X funds, then they also should not be investing in single stocks, which can be more volatile.
Just that government would consider special regulations for leveraged funds indicates a problem — a lack of knowledge from regulators of the fairly obvious inconsistency I mentioned above, of adding restrictions to products that can be safer than individual stocks.
Please do not add even more burdensome and useless restrictions on brokers and investors for leveraged funds.
Thank You.