A.I.M. Users Bulletin Board

[ls7550]

Hi galtinvestor

I reported that I use leveraged index funds such as upro, tqqq, cure, and soxl for lots of AIM action

I pretty much stick to just leveraged ETF's myself nowadays, but I tend to use them simply to hold half as much in the 2x as I would in the 1x (or a third in 3x) i.e. much less aggressive than your choice of leverage utilisation.

One of the risks with investing is timing/valuations. Measure across a peak to trough period and the rewards can be dismal. Average in over 3 time-points (2 years) and you avoid the worst case. Combine that with cost averaging using AIM-HI (80/20 stock/cash) and the rewards will broadly tend to compare reasonably with average 100% buy and hold, but again avoid the worst case outcomes. Cost averaging in and cost averaging across time ... along with perhaps cost averaging out, and you're more inclined to partake of actual averages rather than enduring the misfortune of having invested across the worst possible peak to trough.

In that context, simply AIM the 1x on paper, and use the % stock and % cash figures from that to adjust your actual leveraged ETF positions. If for instance after a AIM trade the on-paper AIM is holding 84% stock, then adjust your actual leveraged ETF exposure so as to hold 42% 2x (or 28% 3x) 58% cash (72% cash if using 3x).

A side benefits of using leveraged ETF's is you can adjust positions (stock exposure) up or down (by revising how much you hold of 2x and 3x/1x or whatever),without actually having to call upon cash at that time (where that cash might be locked up in a term investment that had either no early redemption or penalties in the event of early redemption).