As an RIA for over two decades, I want the ability to use whatever tactical strategies I see fit for my clients as well as myself. I have used inverse funds within hedging strategies since the 1990s to no ill effect for my clients. They are extremely useful tools for hedging against large market losses, especially within Long/Short strategies. With the advent of cannabis, crypto, day-traders, and zero commission trading, there will be even more risky trades and investments being done by retail investors. Even famed ARKK manager Cathie Wood's ETF has cratered into the ground (-50% YTD) by investing in high flying thematic stocks, which are wide spread throughout many ETFs and can obviously be invested individually. We saw the same thing happen in the early 2000s with the TMT bubble. I see a chasm between trying to protect investors from fraud and crypto currency heists, where crimes are being committed vs. investors possibly not fully understanding the risks they are taking with risky ETFs/Individual stocks. Stock market investing is risky, but the vast majority of the millions of investors in this country build wealth through it. In a perfect world, no one would ever lose money on any investment they would ever make, whether in stocks, bonds, crypto or their home, but we all know that is not possible, unless everyone just bought fixed annuities, assuming the life company stayed afloat. My final thought is I remember gaining a client near the end of 2008. He was a referral from another client. He was retired, in his 60s and had told his previous advisor that he was conservative. The client had lost 40% of his retirement account in 6 months, because his previous advisor had set him up more like a moderately aggressive client. These things happen every day. We can't stop what we may consider needless losses, but we can hedge against their likelihood. Inverse funds are just one of those tools to manage risk. I would like to continue to use them without hindrance with some clients and with other RIA firms that use our investment strategies. Thank you for your time.
Steve Rumsey Comment On Regulatory Notice 22-08
As an RIA for over two decades, I want the ability to use whatever tactical strategies I see fit for my clients as well as myself. I have used inverse funds within hedging strategies since the 1990s to no ill effect for my clients. They are extremely useful tools for hedging against large market losses, especially within Long/Short strategies. With the advent of cannabis, crypto, day-traders, and zero commission trading, there will be even more risky trades and investments being done by retail investors. Even famed ARKK manager Cathie Wood's ETF has cratered into the ground (-50% YTD) by investing in high flying thematic stocks, which are wide spread throughout many ETFs and can obviously be invested individually. We saw the same thing happen in the early 2000s with the TMT bubble. I see a chasm between trying to protect investors from fraud and crypto currency heists, where crimes are being committed vs. investors possibly not fully understanding the risks they are taking with risky ETFs/Individual stocks. Stock market investing is risky, but the vast majority of the millions of investors in this country build wealth through it. In a perfect world, no one would ever lose money on any investment they would ever make, whether in stocks, bonds, crypto or their home, but we all know that is not possible, unless everyone just bought fixed annuities, assuming the life company stayed afloat. My final thought is I remember gaining a client near the end of 2008. He was a referral from another client. He was retired, in his 60s and had told his previous advisor that he was conservative. The client had lost 40% of his retirement account in 6 months, because his previous advisor had set him up more like a moderately aggressive client. These things happen every day. We can't stop what we may consider needless losses, but we can hedge against their likelihood. Inverse funds are just one of those tools to manage risk. I would like to continue to use them without hindrance with some clients and with other RIA firms that use our investment strategies. Thank you for your time.