Direxion Daily Gold Miners Bull 2X (NUGT)

[tokyopua]

The reason 3X ETFs are not good long term investments is that there is natural decay built into them. They do not just simply track the movements of a given index 3X. Part of the problem is the fees that the fund charges, they are not just creating these for a hobby. If you read the prospectus, there are always hidden fees. Then there is the fact that they get some kind of exponential decay when the market goes against them even briefly. NUGT so far is a clear example of that.

Here is an article that tries to explain it further. It talks about a year where FAS was down like 40% when the financials were actually UP 13% over the course of the year. They are great while a strong trend lasts over weeks to maybe a few months, but they quickly lose their luster, as holders of DUST are soon to find out...

http://winninginvestor.quickanddirtytips.com/the-dangers-of-investing-with-3x-leveraged-etfs.aspx