Is the era of passive index trackers over?

adindas

Chickereeeee said:

It is easy to beat 'the market' over the long term with a racker IF you believe markets always increase. Just invest in a leveraged tracker e.g. XS2D (2X S&P500) - around twice the gains, with twice the volatility. But over 10 years it is up 600% versus S&P 500 gain of 200%...

Not that simple if you include the fees. There is no such kind of free lunch. Leverage will always involve overnight fees, weekend fees. These fees are in addition to transaction fees and calculated in percentage of your holdings. So your gain will be eaten day by day by the fees.

Also keep in mind if you get a bad days/weeks you might get a margin call that will force you to close your positions even at heavy  losses.

For that reason sensible traders will only do leverage for a short term, not for a long term.