Here’s the question: a triple-leveraged semiconductor ETF that dropped from $302 to $111.16 and has seen over a 60% drawdown—yet, in just two months, it still managed to pull in nearly $7 billion. Is this money going to bargain-hunt at the bottom, or to serve as fuel?
As of August 24, SOXL is at $111.16. In July through the first two weeks of August, net inflows were nearly $7 billion. The more it falls, the more they buy. If you put the same behavior on the underlying stock, people call it “faith.” But put it on a triple-leveraged ETF, and all I can say is: I hope they can calculate the daily costs of decay.
Even better (or stranger), it’s buying the index—not Nvidia or Micron themselves. After chip stocks corrected for two months, the funds didn’t retreat; instead, they increased leverage and surged in. I don’t care whether this is “the bottom.” I just want to see what happens when those nearly $7 billion finally realize that a leveraged ETF can’t simply be held and will inevitably bounce back the way they’re expecting—when the redemption button gets pressed, what kind of stampede it turns into.
Let’s keep watching the show.
As of August 24, SOXL is at $111.16. In July through the first two weeks of August, net inflows were nearly $7 billion. The more it falls, the more they buy. If you put the same behavior on the underlying stock, people call it “faith.” But put it on a triple-leveraged ETF, and all I can say is: I hope they can calculate the daily costs of decay.
Even better (or stranger), it’s buying the index—not Nvidia or Micron themselves. After chip stocks corrected for two months, the funds didn’t retreat; instead, they increased leverage and surged in. I don’t care whether this is “the bottom.” I just want to see what happens when those nearly $7 billion finally realize that a leveraged ETF can’t simply be held and will inevitably bounce back the way they’re expecting—when the redemption button gets pressed, what kind of stampede it turns into.
Let’s keep watching the show.