Sell the Rallies, Stay Bullish on the Longer Term

I don’t equate gambling with investing, but many do by using margin, options, exotic derivatives, and what have you to leverage their various market positions. To be sure, some seers say that the public has been buying 2:1, and even 3:1, leveraged exchange-traded funds (ETFs) on 50% margin, which gives those positions 4:1 and 6:1 leverage, in an attempt to try and outperform the S&P 500 (INDEXSP:.INX). When leverage works in your favor, it can multiply profits enormously. But when leverage works against you, it can be devastating! Clearly, the folks at Long Term Capital Management experienced the dark side of leverage.