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What is the "right" way to utilize leveraged ETF's like TZA?

Hi everyone,

I'm interested in taking some bearish positions in my portfolio, currently comprised of all long positions in various stocks. (Some are up, some are down.)

I'm attracted by the ease of leveraged bear ETF's, like TZA (Direxion's "Daily Small Cap Bear 3X Shares"), but have noticed all sorts of warning advice from Motley Fool, the gist of which seems to be "these are short term (daily?) vehicles only -- don't buy and hold and expect to earn anything".

I look at the historical chart for TZA and it shows pretty much what I'd expect: some periods of growth corresponding to the big scares around Mar 2009, etc, and a long decline corresponding to the past 12-18 months of market rise. The bullish inverse of that fund, the TNA, is pretty much a mirror opposite, as expected.

So, assuming my investment thesis is for a market pullback/correction in the next 3-6 months, what is the right way to utilize TZA? Is it stupid to buy and hold over that period of months (assuming for the sake of argument that the market does indeed go down)? Is one supposed to buy and sell the thing daily, as implied in the name of the fund?


I didn't find the right solution from the internet.

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I wouldn't take any bearish position....I would just move to cash... shorting is a dangerous game.... just my opinion...

Short ETF's like TZA are impossible because they erode and require perfect timing.  I agree with RP3, just go to cash and wait to buy the next dip on TNA or some of your favorite stocks.

Remember, after a pullback, correction, or crash, the stock market returns to a new high 100% of the time.   TNA, SPXL, UDOW will follow.


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