Robert Kronenberg Comment On Regulatory Notice 22-08
Robert Kronenberg
N/A
Inverse and Leveraged funds are an important part of ability to protect my portfolio. In down markets such as currently exists, in which the markets begin falling overnikght or in the free makret and acceIetate to downside the funds provide important day to day portfolio insurance without taking the much more extreme risk of short selling. In additiion, in strong bull markets the leveraged funds provide extra returns and allow for a hedging strategy in case of a market reversal as well as insurance against a catastrophic loss in a situation in which I am short.
I consider inverse and lewveraged funds essential to my style of investmenting and my profits. At one point, for a period of several years I had tow accounts which started with approximately the same balnace. they accounts were different borkers. One borker, a molneypcenter bank, did not permit investment in inverse and leveraged funds. The other borker had no restriction on such investment. Simply because the investment aim of both accounts was the same, the investments were almost identicl4e except for the ability to use leveraged and inverse funds in one account. The fund in which I was able to invest iin leveraed and inverse funds had significantly better results each year that I maintained the two accounts until the point that the due to the better results the balances in each account were sufficiently different that the increassed return in the account that allowed inverse funds and leveraged funds that the better result could no longer be attributed solely to the difference in the abilityh to choose investments.
The workings of the inverse and leveraged funds are not so complicated that most investors can understand it. There will, of course, always be people who risk their money doing things they don't fully understand. If they choose to put their money into things they don't understand, simply making it difficult to invest in complex investments will not help them. They will always find ways to lose their money. To protect the know-nothings completely we would need to restrict all investment in anything but a short list of the most conservative stocks, ban margin, ban short selling, ban options, and freeze accounts if investment losses still
become greater than a preset percentage. Even then, there will still be junk bonds, mortgage-backed securities, digital currencies, tulip bulbs, and slot machines.. We will be hurting all investors, but still not protecting the fools.
There are better ways to protect without hurting those investors who know what they are doing. For instance,
online trades in inverse or leveraged funds could pop up a short warning. The same warning could be given by live brokers when a trade is made.
Holding everyone back for the sake of the lowest common denominator never works in any endeavor, and hurts a majority.
Robert Kronenberg Comment On Regulatory Notice 22-08
Inverse and Leveraged funds are an important part of ability to protect my portfolio. In down markets such as currently exists, in which the markets begin falling overnikght or in the free makret and acceIetate to downside the funds provide important day to day portfolio insurance without taking the much more extreme risk of short selling. In additiion, in strong bull markets the leveraged funds provide extra returns and allow for a hedging strategy in case of a market reversal as well as insurance against a catastrophic loss in a situation in which I am short.
I consider inverse and lewveraged funds essential to my style of investmenting and my profits. At one point, for a period of several years I had tow accounts which started with approximately the same balnace. they accounts were different borkers. One borker, a molneypcenter bank, did not permit investment in inverse and leveraged funds. The other borker had no restriction on such investment. Simply because the investment aim of both accounts was the same, the investments were almost identicl4e except for the ability to use leveraged and inverse funds in one account. The fund in which I was able to invest iin leveraed and inverse funds had significantly better results each year that I maintained the two accounts until the point that the due to the better results the balances in each account were sufficiently different that the increassed return in the account that allowed inverse funds and leveraged funds that the better result could no longer be attributed solely to the difference in the abilityh to choose investments.
The workings of the inverse and leveraged funds are not so complicated that most investors can understand it. There will, of course, always be people who risk their money doing things they don't fully understand. If they choose to put their money into things they don't understand, simply making it difficult to invest in complex investments will not help them. They will always find ways to lose their money. To protect the know-nothings completely we would need to restrict all investment in anything but a short list of the most conservative stocks, ban margin, ban short selling, ban options, and freeze accounts if investment losses still
become greater than a preset percentage. Even then, there will still be junk bonds, mortgage-backed securities, digital currencies, tulip bulbs, and slot machines.. We will be hurting all investors, but still not protecting the fools.
There are better ways to protect without hurting those investors who know what they are doing. For instance,
online trades in inverse or leveraged funds could pop up a short warning. The same warning could be given by live brokers when a trade is made.
Holding everyone back for the sake of the lowest common denominator never works in any endeavor, and hurts a majority.