I believe that most people who do choose to invest in these funds are aware of the risks and do their own homework before they start investing. While I do believe that offering education on the risks, as well as risk mitigation strategies, would be beneficial for traders, I do not believe that extra layers of bureaucracy and testing will create better or safer traders, and will simply reduce the activity on such funds unnecessarily. This is to no one's benefit.
I trade on TD Ameritrade and was given good resources detailing the risks of triple leveraged/inverse funds (not to mention all aspects of trading in general), and did further research into them before deciding if I wanted to invest in them, and if so then which to invest in. I keep only a fraction of my portfolio in these funds and manage them and associated option positions daily: chart reading, seeing if an option is ITM/OTM, market sentiment, checking the cash and shares I have in the case I get assigned to an option position. Risk adverse and novice traders know to stay away from these funds, and to opt for conservative approaches like mutual funds, 401ks or perhaps market index ETFs if they have some risk tolerance.
Additionally, traders who lack cash flow to trade with can still trade and profit if they research these funds and get advice. When I began investing, I did not begin trading these funds until I became well versed in trading regular stocks and option contracts. I learned primarily from self-taught family members and online resources, and have found these resources to be more than adequate at developing my investing strategies.
These stocks should not be limited by wealth. An investor who started rich will not stay that way if they do not take the risks seriously; a lack of generational wealth does not equal stupidity or an absence of knowledge either. It's a fact that my family had risen from severe poverty and debt by trading high risk stocks and funds intelligently. My family didn't have 30 years more to pocket into a mutual fund, and hardly made enough money to save some to invest; this we needed fast results to help our quickly worsening circumstances: job loss, rising living expenses, hospital and credit bills... and high risk high return investing was we made work for us.These funds are a public commodity and a useful tool, and ought to stay that way so they can be utilized by people who need more economic mobility.
Additionally, no-trade periods could be hazardous to investors who are trading options and need to place or alter positions, or perhaps in times of drastic market movement. In such situation, it may be necessary to sell stock to maximize gains or minimize losses, but a personal no-trade restriction can be debilitating to investors who cannot change their positions. It doesn't matter how knowledgeable or wealthy you are: if you cannot trade during a critical time, you can expect unfortunate outcomes. One could always create stop orders for a leveraged fund or other risky investments if potential downward movement is anticipated; or hedge positions in associated inverse funds or in other safer investments, and of course diversify their portfolio to create greater stability in all market conditions; a good trader can profit from any kind of market.
Investing is risky in of itself; by no means can one claim or suggest that one method is always 'safe', and that other forms of more volatile investment are absolutely dangerous and must be treated like hazardous waste. All retail investors understand that there is risk involved in trading any kind of fund. It is at their discretion as to what they would like to invest in, when, and how much for how long; everyone deserves the right to be in full control of their investments, and must assume responsibility for their trades and educating themselves. Government regulations will not save people from making losing trades. It will instead reduce the avenues for economic mobility for financially disadvantaged people by imposing a wealth requirement, potentially increase the risk of investing in general for 'certified' high risk investors by preventing trading at moments when position changes are necessary, and in general would discourage the robust activity that drives the potential for quick and high profitability for investors.
Rather than haphazardly proposing legislation on the free market, I suggest that the FINRA should focus it's attention on providing free educational resources on these funds and other more traditional forms of investment---be it online, in schools, or in other community spaces. Knowledge, understanding and experience is what creates responsible traders, I must emphasize, and additional barriers that will target the poor and make these funds even more difficult to navigate are an unnecessary threat.
I hope you consider my points unbiasedly and will opt to serve in favor of all investors who have strategies and interests that differ from slower, traditional investments. We are capable of handling our assets, and will take responsibility for our losses as we always have.
Thank you very much.
Katti Ming Comment On Regulatory Notice 22-08
I believe that most people who do choose to invest in these funds are aware of the risks and do their own homework before they start investing. While I do believe that offering education on the risks, as well as risk mitigation strategies, would be beneficial for traders, I do not believe that extra layers of bureaucracy and testing will create better or safer traders, and will simply reduce the activity on such funds unnecessarily. This is to no one's benefit.
I trade on TD Ameritrade and was given good resources detailing the risks of triple leveraged/inverse funds (not to mention all aspects of trading in general), and did further research into them before deciding if I wanted to invest in them, and if so then which to invest in. I keep only a fraction of my portfolio in these funds and manage them and associated option positions daily: chart reading, seeing if an option is ITM/OTM, market sentiment, checking the cash and shares I have in the case I get assigned to an option position. Risk adverse and novice traders know to stay away from these funds, and to opt for conservative approaches like mutual funds, 401ks or perhaps market index ETFs if they have some risk tolerance.
Additionally, traders who lack cash flow to trade with can still trade and profit if they research these funds and get advice. When I began investing, I did not begin trading these funds until I became well versed in trading regular stocks and option contracts. I learned primarily from self-taught family members and online resources, and have found these resources to be more than adequate at developing my investing strategies.
These stocks should not be limited by wealth. An investor who started rich will not stay that way if they do not take the risks seriously; a lack of generational wealth does not equal stupidity or an absence of knowledge either. It's a fact that my family had risen from severe poverty and debt by trading high risk stocks and funds intelligently. My family didn't have 30 years more to pocket into a mutual fund, and hardly made enough money to save some to invest; this we needed fast results to help our quickly worsening circumstances: job loss, rising living expenses, hospital and credit bills... and high risk high return investing was we made work for us.These funds are a public commodity and a useful tool, and ought to stay that way so they can be utilized by people who need more economic mobility.
Additionally, no-trade periods could be hazardous to investors who are trading options and need to place or alter positions, or perhaps in times of drastic market movement. In such situation, it may be necessary to sell stock to maximize gains or minimize losses, but a personal no-trade restriction can be debilitating to investors who cannot change their positions. It doesn't matter how knowledgeable or wealthy you are: if you cannot trade during a critical time, you can expect unfortunate outcomes. One could always create stop orders for a leveraged fund or other risky investments if potential downward movement is anticipated; or hedge positions in associated inverse funds or in other safer investments, and of course diversify their portfolio to create greater stability in all market conditions; a good trader can profit from any kind of market.
Investing is risky in of itself; by no means can one claim or suggest that one method is always 'safe', and that other forms of more volatile investment are absolutely dangerous and must be treated like hazardous waste. All retail investors understand that there is risk involved in trading any kind of fund. It is at their discretion as to what they would like to invest in, when, and how much for how long; everyone deserves the right to be in full control of their investments, and must assume responsibility for their trades and educating themselves. Government regulations will not save people from making losing trades. It will instead reduce the avenues for economic mobility for financially disadvantaged people by imposing a wealth requirement, potentially increase the risk of investing in general for 'certified' high risk investors by preventing trading at moments when position changes are necessary, and in general would discourage the robust activity that drives the potential for quick and high profitability for investors.
Rather than haphazardly proposing legislation on the free market, I suggest that the FINRA should focus it's attention on providing free educational resources on these funds and other more traditional forms of investment---be it online, in schools, or in other community spaces. Knowledge, understanding and experience is what creates responsible traders, I must emphasize, and additional barriers that will target the poor and make these funds even more difficult to navigate are an unnecessary threat.
I hope you consider my points unbiasedly and will opt to serve in favor of all investors who have strategies and interests that differ from slower, traditional investments. We are capable of handling our assets, and will take responsibility for our losses as we always have.
Thank you very much.