Gerald Jolliffe Comment On Regulatory Notice 22-08
Gerald Jolliffe
N/A
Comments: I strongly support the provision of detailed, useful information about the structure, and past and anticipated future performance of leveraged ETFs, but very much object to limits or prohibitions of individuals' freedom to perform leveraged ETF trades, or to hold onto trades as mid-to long-term investments, especially where a leveraged ETF has a long, documented positive history.
Firms that provide leveraged ETFs should, as a "top-line" requirement, provide historical performance information about each such ETF, so that potential investors/traders can make informed decisions, and rough - of course - projections about future expectations. Such information, in my view, includes the historical performance of such ETFs at the end of the trading day, at the end of short-term, informative periods, such as weekly and monthly, and long-term, such as annual and long-term historical (say, 10 plus years, when the funds have been available for long periods). They should be made very aware of historical "decay" rates, which in my opinion, can be the biggest potential problem with leveraged ETFs. That helps immensely traders/investors to accurately assess their realistic relative risk potential, and decide to trade - or, not to trade, accordingly, and to "hold," or not to hold, for short periods - say, 1-3 days, or for long periods - say, several months or even a year or more. If they understand what they are doing, and understand the purchased fund, and its performance history, say TECL (which I'm currently considering purchasing, again), they should be allowed to do so, with few, if any restrictions, no matter how much money they choose to invest, or how long they intend to hold the investment.
Using me as an example, I purchased (from my memory - I haven't recently looked up my old records!), around 2009 - near the iconically famous "Haines Bottom!," in an IRA, about $10,000 of TECL, held onto it, as a thoughtful, productive investment, for many months, and then sold it for about $30,000. If a leveraged ETF decays, slightly, over several years, who cares? (just my opinion, but I positively mean it!) Given the targeted 2 to 3 times performance, who cares? ..... meaning who SHOULD care? If a 3X targeted leveraged ETF returns say, 2.75 times over a two year period, GOOD! If it returns just, say, 1.35 times (when it targets 3.0), or performs directly in a negative fashion (with a significant decay rate), that is a big problem, and potential investors should be informed in a detailed fashion, beforehand. Consistently un-performing leveraged ETFs should probably be taken off the market, or significantly re-structured.
Gee, I hope my comments are not too late......I'm figuring that the May 9th deadline means 12:00 midnight, EST. Well, it's now 8:58 here in California! .......11:58 EST.....
I sincerely hope that FINRA focuses on enhanced, helpful investment information, not restrictions/prohibitions.......if I want to invest a significant amount of money in a leveraged ETF with a long, honestly productive history, that's my business, and I (and anybody else) should not be restricted from doing that!).
Thank you for this opportunity to provide input. I hope that it's helpful!
Gerald Jolliffe Comment On Regulatory Notice 22-08
Comments: I strongly support the provision of detailed, useful information about the structure, and past and anticipated future performance of leveraged ETFs, but very much object to limits or prohibitions of individuals' freedom to perform leveraged ETF trades, or to hold onto trades as mid-to long-term investments, especially where a leveraged ETF has a long, documented positive history.
Firms that provide leveraged ETFs should, as a "top-line" requirement, provide historical performance information about each such ETF, so that potential investors/traders can make informed decisions, and rough - of course - projections about future expectations. Such information, in my view, includes the historical performance of such ETFs at the end of the trading day, at the end of short-term, informative periods, such as weekly and monthly, and long-term, such as annual and long-term historical (say, 10 plus years, when the funds have been available for long periods). They should be made very aware of historical "decay" rates, which in my opinion, can be the biggest potential problem with leveraged ETFs. That helps immensely traders/investors to accurately assess their realistic relative risk potential, and decide to trade - or, not to trade, accordingly, and to "hold," or not to hold, for short periods - say, 1-3 days, or for long periods - say, several months or even a year or more. If they understand what they are doing, and understand the purchased fund, and its performance history, say TECL (which I'm currently considering purchasing, again), they should be allowed to do so, with few, if any restrictions, no matter how much money they choose to invest, or how long they intend to hold the investment.
Using me as an example, I purchased (from my memory - I haven't recently looked up my old records!), around 2009 - near the iconically famous "Haines Bottom!," in an IRA, about $10,000 of TECL, held onto it, as a thoughtful, productive investment, for many months, and then sold it for about $30,000. If a leveraged ETF decays, slightly, over several years, who cares? (just my opinion, but I positively mean it!) Given the targeted 2 to 3 times performance, who cares? ..... meaning who SHOULD care? If a 3X targeted leveraged ETF returns say, 2.75 times over a two year period, GOOD! If it returns just, say, 1.35 times (when it targets 3.0), or performs directly in a negative fashion (with a significant decay rate), that is a big problem, and potential investors should be informed in a detailed fashion, beforehand. Consistently un-performing leveraged ETFs should probably be taken off the market, or significantly re-structured.
Gee, I hope my comments are not too late......I'm figuring that the May 9th deadline means 12:00 midnight, EST. Well, it's now 8:58 here in California! .......11:58 EST.....
I sincerely hope that FINRA focuses on enhanced, helpful investment information, not restrictions/prohibitions.......if I want to invest a significant amount of money in a leveraged ETF with a long, honestly productive history, that's my business, and I (and anybody else) should not be restricted from doing that!).
Thank you for this opportunity to provide input. I hope that it's helpful!