Tomorrow, you could begin doubling your account every single month starting with one letter.
The letter will come from a 20-year trading professional named Ian Cooper. He says, “In 2017, following my trades you would be doubling even tripling your account some months. Let me show you how.”
He will show you exactly what to do... and he’ll give you the blueprint for just $1.
On the following graph, which of the three ETF’s representing six year returns for the S&P 500, would you have preferred to see in your portfolio?
The lowest line on the graph is the performance of the single beta ETF – the SPY, which tracks
the S&P 500 index at a 1:1 ratio. If the S&P moves up 1% the SPY will also rally by 1% (it’s not
perfect, but always very close). Contrarily, if the S&P is down 1%, the SPY should also fall by 1%.
Since the start of the bull market in March of 2009, the SPY climbed from $60 to a fantastic $209
over the next six and a half years, a gain of nearly 225% over that time. The important thing to
remember is that SPY represents all 500 stocks of the S&P 500 index, and traded all by itself, the
SPY is a single stock that acts like a fully DIVERSIFIED S&P fund!
Now let’s look at a how we could improve that return.
The next line on the chart (red) is a double beta ETF – the SSO. It also tracks the S&P 500, but
leverages its return 2:1. - hence the reason it is referred to as “double beta”. At the start of the
bull market the SSO was priced at $7 (adjusted for splits), and proceeded to climb to $68 by June
of 2015. That’s a gain of nearly 725% – or triple the SPY!
Guess what just happened? Even though the SSO is only a DOUBLE beta stock, by using it you
TRIPLED YOUR RETURNS on the S&P!
All you did was the same thing a regular mutual fund investor would have done during the same
time: buy the fund (the ETF stock in this case) and just sit on it for six and half years!
On the same chart, now let’s look at the incredible gains of the highest line (green) on the chart.
That chart line represents the triple beta ETF – the SPXL, which tracks the S&P 500 too, but with
a daily ratio of 3:1! In other words, when the S&P was up 1%, the SPXL was up 3%!
And note what happened over time for those who continued holding on to that ETF. For the
same six and a half years of time, you would have earned a spectacular rate of return of nearly
1700%! That’s right, $10,000 would have become $170,000! Crazy what a small change in what
we buy can do, isn’t it?
Notice you didn’t have to understand anything more than to be an owner of the ETF while
markets were going up, and a seller of them when markets top out.
The dramatically higher returning SPXL and SSO are called LEVERAGED Exchange Traded Funds. In other words, they operate on the basis that if you invest $1, it will trade with the effect of having $2 invested (almost like you were using margin – BUT YOU ARE NOT – nor do you have
any liability for anything beyond your $1 invested).
But, leverage as you know, can almost always become a double edged sword. Leverage in this
case will apply in BOTH DIRECTIONS. A triple beta ETF will move up three times as fast as the
underlying index it follows, but it will also fall three times as fast on days when the underlying
index corrects.
That may scare some investors away from using leveraged ETF’s, but take note of something
very interesting about the chart: When the SPY dropped, though the SPXL dropped three times
as much, the following rallies caused it to STILL DRAMATICALLY OUTPERFORM the S&P over
time.
After each correction on the SPX, when markets turned back up and the S&P recovered, the
SPXL and SSO did so as well, but with the explosive strength of 2-3 times more gains.
That’s the beauty of a trading leveraged ETF’s in bull market, corrections are usually short lived
and the recoveries are dramatic. That’s why simply buying and HOLDING the SPXL during the six year bull trend turned an initial $5000 investment into an astonishing $97,000 windfall, or 18 times your money!
So to answer any underlying concern, “Should leveraged ETF’s be held long term?” The answer
is a resounding YES, with one important qualifier – we only hold them during a bull trend!
In a bear trend, leveraged ETF’s fall faster than the markets they track, and by holding on, we
risk not only giving back the incredible gains we earned in the bull market, but can eventually
even surpass the losses of the index itself:
That is the single reason why we don’t hold on to anything (even single beta ETF’s) during bear
market declines.
But, there’s an easy fix to make sure you never end up hanging on when it’s time to get out!
Know When to Get Out
There are some very simple and effective ways to never, EVER, get caught or stay on the wrong
side of the market again. If staying too long has happened to you before, you’re in good
company. Poorer for the experience certainly, but when a bear markets begins, most investors
will freeze with fear and unfortunately do nothing.
That happens partly because they don’t recognize a bear market beginning, and also because
they’ve been taught over and over, “Markets always correct, just hang on and don’t worry, it
always recovers”.
In one respect, what they were told is partly true, historically market have always recovered,
eventually. It just boils down to how long you want to wait to get your money back. After six
years from the bear market lows in 2009, it wasn’t until nearly five years latter that they were
back to even.
Consider however how much better off you would have been if you had simply moved to cash
ahead of the 2007-2008 bear market that once again, pulled everything down with it.
For example: if you had $100K in the market at the start of the 2008 bear market, it was worth
less than half that amount by the time the bear market low was reached. It then took another 5
years to get back your original $100K.
On the other hand, had you moved to cash at the start of the crash instead, you would have
kept your $100K in cash until March 2009, and then by investing in the SPXL, your $100K would
have exploded into $1,700,000 by June 2015!
PLEASE READ: Auto-trading, or any broker or advisor-directed type of trading, is not supported or endorsed by TradeWins. For additional information on auto-trading, you may visit the SEC’s website: All About Auto-Trading, TradeWins does not recommend or refer subscribers to broker-dealers. You should perform your own due diligence with respect to satisfactory broker-dealers and whether to open a brokerage account. You should always consult with your own professional advisers regarding equities and options on equities trading.
1) The information provided by the newsletters, trading, training and educational products related to various markets (collectively referred to as the “Services”) is not customized or personalized to any particular risk profile or tolerance. Nor is the information published by TradeWins Publishing (“TradeWins”) a customized or personalized recommendation to buy, sell, hold, or invest in particular financial products. The Services are intended to supplement your own research and analysis.
2) TradeWins’ Services are not a solicitation or offer to buy or sell any financial products, and the Services are not intended to provide money management advice or services.
3) Past performance is not necessarily indicative of future results. Trading and investing involve substantial risk. Trading on margin carries a high level of risk, and may not be suitable for all investors. Other than the refund policy detailed elsewhere, TradeWins does not make any guarantee or other promise as to any results that may be obtained from using the Services. No person subscribing for the Services (“Subscriber”) should make any investment decision without first consulting his or her own personal financial adviser, broker or consultant. TradeWins disclaims any and all liability in the event anything contained in the Services proves to be inaccurate, incomplete or unreliable, or results in any investment or other loss by a Subscriber.
4) You should trade or invest only “risk capital” – money you can afford to lose. Trading stocks and stock options involves high risk and you can lose the entire principal amount invested or more.
5) All investments carry risk and all trading decisions made by a person remain the responsibility of that person. There is no guarantee that systems, indicators, or trading signals will result in profits or that they will not produce losses. Subscribers should fully understand all risks associated with any kind of trading or investing before engaging in such activities.
6) Some profit examples are based on hypothetical or simulated trading. This means the trades are not actual trades and instead are hypothetical trades based on real market prices at the time the recommendation is disseminated. No actual money is invested, nor are any trades executed. Hypothetical or simulated performance is not necessarily indicative of future results. Hypothetical performance results have many inherent limitations, some of which are described below. Also, the hypothetical results do not include the costs of subscriptions, commissions, or other fees. Because the trades underlying these examples have not actually been executed, the results may understate or overstate the impact of certain market factors, such as lack of liquidity. Simulated trading services in general are also designed with the benefit of hindsight, which may not be relevant to actual trading. In addition, hypothetical trading does not involve financial risk, and no hypothetical trading record can completely account for the impact of financial risk of actual trading. TradeWins makes no representations or warranties that any account will or is likely to achieve profits similar to those shown.
7) No representation is being made that you will achieve profits or the same results as any person providing testimonial. No representation is being made that any person providing a testimonial is likely to continue to experience profitable trading after the date on which the testimonial was provided, and in fact the person providing the testimonial may have experienced losses.
8) The author experiences are not typical. The author is an experienced investor and your results will vary depending on risk tolerance, amount of risk capital utilized, size of trading position and other factors. Certain Subscribers may modify the author methods, or modify or ignore the rules or risk parameters, and any such actions are taken entirely at the Subscriber’s own election and for the Subscriber’s own risk.