What index style ETFs have you uncovered in your research that you might recommend?
Has anyone had any success or warnings with some of the more exotic leveraged holding ETFs?
I'd be cautious with the more exotic leveraged ETF. Instead, for my non-investment accounts I've been mostly holding the Mag 7 since last year (after rotating out of pandemic stocks following the rebound). I shared my results over the last couple of years on by blog where I document my thinking for future reference/improvement (https://gmays.com/2-year-follow-up-on-buying-the-dip-on-pand...). My current IRR from that portfolio is 83.70% over the last couple years for context.
More aggressively, VIOV and VBR target "Small Cap" "Value", stocks, 1 - 2% of the total market that are smaller companies with more low-growth prospects. There is academic research to suggest that there may be some higher-risk but even-more-high-reward for these type of stocks that is consistently underpriced by the so-called "efficient market hypothesis."
This is a backtest from 1972 where $10k in Total Market (~VTI) and Small Cap Value stocks were bought and Small Cap Value ended with $7.5m against Total Market $2m, while retaining better Sharpe and Sortino ratios.
https://www.portfoliovisualizer.com/backtest-asset-class-all...
That is only for those who could commit long term with conviction of their research and understanding, as there are periods of 10-15 years you could underperform Total Market: https://www.portfoliovisualizer.com/backtest-portfolio?s=y&s...
Otherwise, I stick with the classic QQQ for long term holdings and have some fun with the VIX when I want to gamble a bit more.
That's the way I've been doing it since years.
I wanted to diversify so I got plenty of US, some India and China, , Silicon, Water, Clean Energy.
The stock market no longer meets the requirements to be considered an investment, using Benjamin Graham's definitions. While it seems like it has no where to go up, this is an illusion, and most of the smart money has diversified or left the stock market completely.
Rule number one of investing is, don't lose your principal. The market has for almost 3 years now, been approaching irrational exuberance indicating it may be at the top of an everything bubble.
There is no visibility on the leverage, and updates to the valuation of an ETF more likely than not will not follow even the underlying portfolio valuation.
For a perfect example, thanks to the YTM loophole in reporting, the main ETF that follows bonds didn't see a severe correction (to the downward valuation) while interest rates were going up despite the fact that the underlying of the fund lost 1/3rd of its value almost overnight using standard financial math valuation for bonds in changing interest rates. The higher interest rates being offered by the Fed dropped the price of all existing, for the underlying, and at the time it was roughly 99% US 30Y bonds iirc at 1.5%. The ETF traded at 115 per share. 2 years later in a 4.5% available bond, it had only dropped to 108/share. Despite book value of the underlying having lost significant value, they claim its updated daily based on market conditions, but they follow the YTM loophole to avoid marking to market the underlying; along similar dirty lines as the Libor rate scandals.
Additionally, there is no visibility, or for that matter safeguard against someone crashing your investment and stealing your money through options. Many of the entities involved are tangentially related to middlemen who have the exclusion for creating synthetic shares (out of nothing).
I'm sure you've seen some of the GME stuff that's been going on over the years, the functional component is options, that may be pushed out in perpetuity. The fact that the underlying aggregate is shorted more than the shares in existence, should cause a short squeeze normally. That would normally cause the price to go up in a short squeeze, but when you can create synthetic shares into existence that doesn't happen and they capture the profit both ways, while tamping down the squeeze. Any big player can utilize PFOF, and yield farming to steal your money.
Invest in something tangible, with cashflow, where you've done the research.
There are just too many ways for you to lose everything from bad actors in the stock market, and the SEC is helpless to go after the people involved since its a systemic problem at the top, it is a captive system, where putting you money into it is volunteering for it to be stolen; with the hope that you'll make some money, and the fear that you'll miss out.