Thursday, May 21, 2009

The Stock Market's Riskiest ETFs

At a time when too much debt on the part of everyone from homeowners to hedge funds brought the world financial system to the brink, you'd think "leverage" would be a four-letter word. But if the explosive growth of leveraged exchange-traded funds is any indication, it seems like investors just can't get their hands on enough money in order to boost returns.

True, leveraged ETFs offer a cheap, liquid and transparent way to double- or even triple-down on the movements of their underlying indexes — both long and short — but they are unsuitable or even dangerous if you don't understand the product. More...

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