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How Often are Leveraged Positions Used?




A: Keep in mind that not all of our strategies use leverage positions.  

However, here are some guidelines for the ones that do:

Because the strategies change positions an average of only about 3-4 times per year – but more often during times when the market is hitting an inflection point – it depends 100% on the period analyzed. These generalities may help to answer your question:

1) When the market is in a long-term bullish mode, the strategies are almost always holding 2x-leveraged ETFs. That includes right through corrections, which are rapid drops from overenthusiastic, overbought conditions back to the long-term mean of prices. 

As a result, the current set of strategies offered can decline as much as -20% or more before recovering and heading back higher. Long-term investors should ignore those swings because they are the result of changes in sentiment and not changes in underlying investment fundamentals.  The strategies usually recover quite quickly after a correction and their paper losses – as long as you don't sell out of panic.

2) The models don't attempt to time short-term corrections when the economy is growing because it is impossible to do so and still maintain the longer-term hold-times and lower turnover that our subscribers desire. Remember that the stock market has never experienced a significant, long-term bear market without an associated economic contraction. In the future, we will be introducing the 2nd generation of strategies that utilize technical signals and WILL avoid severe corrections.)

3) Because of these characteristics, it's likely that our models hold leveraged ETF positions most of the time – the amount of time over the long-term that the market is in what's considered to be in a rising, 'bullish mode.' 

Therefore, for a slight majority of the time, the strategies will be holding leveraged positions, while during a lesser amount of the time, they will be in "bearish-mode" and likely holding conservative, non-leveraged ETFs, fixed-income ETFs, or Cash-proxy ETFs. Some of the strategies may also hold inverse ETFs, and even leveraged-inverse ETFs (i.e., our S&P 500 Bull/Bear Strategy).

However, we have recently introduced a model that does not use leveraged or inverse positions with our S&P 500 Persistent Profits Strategy.

Non-Leveraged Strategies

In March 2019, we introduced the first of several non-leveraged ETF strategies with our S&P 500 Persistent Profits Strategy.' This model – and more new ones to be added soon – also do not use inverse positions.



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