Just doing ETFs is enough | Chesley Investment Advisory Executive Director Park Se-ik

Summary

Park Se-ik argues that ordinary investors can simply hold plain 1x ETFs but should avoid 3x leveraged ETFs, using semiconductor and Korea examples to show how leverage and volatility decay destroy returns. He contrasts a steadily rising 1x Philadelphia Semiconductor Index ETF with severe drawdowns in the 3x semiconductor ETF and KORU. He adds that leverage may be acceptable for professionals but is a dangerous gambling-like tool for retail investors.

• Reviews a plain 1x Philadelphia Semiconductor Index ETF that rose from 185 at its 2022 high to 270 in 2024 and 655 recently.
• Contrasts it with the 3x semiconductor ETF, which fell from $74 to $6, recovered to $70, then dropped to $8 and remains volatile.
• Shows KORU underperforming the KOSPI because of leverage decay across 2018, 2020, 2021, and the recent rally.
• Calls 3x leveraged ETFs gambling products disguised as stock investment and argues they should be avoided or banned.
• Notes leverage is acceptable mainly for professionals because losses are magnified when used incorrectly.
• Recommends daily newspaper reading as an investment habit.