Profiting from the Recklessness of Others

Profiting from the Recklessness of Others

A couple months ago, I wrote about the dangers of levered ETFs, showing how these products designed to juice investor’s returns end up eroding capital due to the subtle mathematical logic of compounding. In my last post, I followed up on the topic by describing the Kelly Criterion, a mathematical framework that can tell investors […]

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The Line Between Aggressive and Crazy

The Line Between Aggressive and Crazy

Suppose I offer you a bet. Flip a coin, heads you lose your entire bet, tails you win it back plus one and a half times, so a ten dollar bet becomes $25. And furthermore I’ll let you keep making this bet as many times as you like over the next hour, say. This is […]

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“Make it a Quadruple”

“Make it a Quadruple”

This month, the financial press has been abuzz with the latest case study in Wall Street’s storied history of feeding speculative frenzies: the quadruple-levered ETF. On May 2 the SEC approved a request to list two ETFs, the ForceShares Daily 4X US Market Futures Long Fund under the ticker UP, and the ForceShares Daily 4X US […]

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