Why Shana HATES These ETFs

I want to start by saying that these are not funds that are meant for long-term holds, especially not QLD. In fact, there is a major disclaimer on the landing page for that fund saying this is not meant for being held for more than a day. We'll get into the trader funds and how they're a little bit different.

From the status of the exposure strategy, all four of these funds are two times levered to a respective index. QLD, MQ, and QQQP to the NASDAQ 100, and SPY to the S&P 500. Levered funds are using derivatives to gather their leverage, and they are levered not just on upside but on downside.

So you have to have really high conviction in the outperformance of this particular index if you're going to invest in these, especially QLD. It's a trading fund; it is not meant to be held for more than a day. It resets daily, but the aspect of this that is worth noting is that if you go up 100%, that's great, but if you go down 100%, you have to go up 200% to get your money back.

It magnifies the risk, and volatility in these markets can be high, and volatility is not your friend when you're looking at levered ETFs because you have to get double the return of the downside to match the potential upside. So, you really have to get it right, and that's why I don't typically suggest using these products at all unless you are an active trader and you're looking to hedge or really convey a high conviction in something to happen in a very short time period.