Hi Carl, thanks for your response and for posting the links. I have now retracted my initial strong downvote of your comment.
I understand and am sympathetic of the view that altruists investing to donate should be a lot more risk-seeking than when investing to fund their own future consumption. My concern was entirely based on your recommendation to invest long term in leveraged ETF’s. I did not think this is a good idea because leveraged ETF’s can have realized returns that deviate substantially from its underlying index in a bad and unexpected way. Given current market conditions of elevated volatility, they are especially dangerous and more likely to have poor performance. The original EA post was about taxes and likely from someone with limited investment experience. I thought your advice could actually be harmful and lead to distressing investment results.
From your links, I saw that Brian Tomasik conducted simulations of leveraged ETF’s and concluded that altruists should consider them as an effective way to apply leverage. I did not review his work in detail but it does alleviate my concern of holding leveraged ETF’s over long periods. Still, as discussed in the links you shared, this should be done with caution and with awareness of the complicating role that other factors play (e.g. fees, choice of portfolio to lever, market conditions). If investors are unaware of these risks and complexities, there could be a backlash.
Since your comment now contains a cautionary disclaimer and the various links that clearly indicate the challenges involved with leverage, I think it’s unlikely to be misinterpreted anymore. Thank you for your response!
Hi Carl, thanks for your response and for posting the links. I have now retracted my initial strong downvote of your comment.
I understand and am sympathetic of the view that altruists investing to donate should be a lot more risk-seeking than when investing to fund their own future consumption. My concern was entirely based on your recommendation to invest long term in leveraged ETF’s. I did not think this is a good idea because leveraged ETF’s can have realized returns that deviate substantially from its underlying index in a bad and unexpected way. Given current market conditions of elevated volatility, they are especially dangerous and more likely to have poor performance. The original EA post was about taxes and likely from someone with limited investment experience. I thought your advice could actually be harmful and lead to distressing investment results.
From your links, I saw that Brian Tomasik conducted simulations of leveraged ETF’s and concluded that altruists should consider them as an effective way to apply leverage. I did not review his work in detail but it does alleviate my concern of holding leveraged ETF’s over long periods. Still, as discussed in the links you shared, this should be done with caution and with awareness of the complicating role that other factors play (e.g. fees, choice of portfolio to lever, market conditions). If investors are unaware of these risks and complexities, there could be a backlash.
Since your comment now contains a cautionary disclaimer and the various links that clearly indicate the challenges involved with leverage, I think it’s unlikely to be misinterpreted anymore. Thank you for your response!