The ETF industry looked at single-stock leveraged products and decided the problem was they weren't making enough of them. SK Hynix now has its own triple-leveraged fund because apparently someone at a product development meeting said "you know what semiconductor investors need? The ability to lose everything by lunch."
This is the natural endpoint of an industry that started with boring index funds and got bored. Low costs and tax efficiency weren't exciting enough. Passive investing was too calm. So they bolted leverage onto individual stocks and called it innovation.
SK Hynix makes memory chips. Volatile business. Cyclical as hell. Trades like a penny stock when the cycle turns. Someone looked at that chart and thought "needs more amplitude."
The leverage is getting "a little carried away" according to people who apparently just noticed. A little carried away. Like saying the Hindenburg had a minor heating issue. These products don't amplify gains. They amplify the speed at which retail traders discover what beta decay means. And they discover it at 3x speed.
The best part is watching someone buy a 3x leveraged semiconductor ETF and then check their phone every fifteen minutes like they're monitoring a soufflé. It's not going to rise. It's going to collapse. The only question is whether you'll be watching when it happens.
ETF providers keep launching these things because people keep buying them. Can't really blame the manufacturers. If idiots lined up to buy chainsaws with the safety guards removed, Home Depot would sell chainsaws with the safety guards removed.
SK Hynix investors can now experience three times the pain of a memory chip downcycle, which is like asking for triple the food poisoning because the regular amount wasn't teaching you the lesson fast enough.
Photo by Brecht Corbeel on Unsplash
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