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Is everybody aware of the power of leveraged index funds?


I know, I know, the old mantra says that leveraged funds (whether they be 1.5X, 2X or 2.5X the market index) work both ways: yes, it can make you extra money (if the market shows positive returns), but it can also lose you extra money (if the market shows negative returns).

I've done a little experimenting and I've found that whatever time frame you're looking at, if the period annualized positive returns for the market (and it is hard, perhaps impossible to find any 15-year period where this didn't happen), any leveraged fund makes a GREAT DEAL more than a regular index fund.

From 1950 to 2006, $10,000 in the S&P 500 realizes $628,744.20 in gains. With a 1.5X leveraged fund, $2,818,647.36! And here's the whopper: with a 2.5X leveraged fund, that $10,000 turns into $17,411,902.42!!!

I always thought leveraged funds expose you to extra volatility, and nothing else. I assumed that leveraged and non-leveraged funds arrived at that same point in the future. They don't!

And if you get out of the markets way down w/ leverage-100,000,000? What funds are you referring to

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