Investors Are Learning a Hard Lesson About the Dangers of Using Leverage
Right now, too many investors are experiencing the downside of investing in leveraged ETFs.
Overview
During the first half of 2026, the Direxion Daily Semiconductor Bull 3x ETF (NYSEMKT: SOXL) was up a staggering 535%. It was a choppy ride, as to be expected with any ETF (exchange-traded fund) that uses leverage. Still, the power of the artificial intelligence (AI) trade continued to generate huge returns for investors.
Details
Leveraged ETFs give investors the ability to magnify their daily exposure to an asset -- be it a stock, a sector, or a country -- through the use of derivatives contracts. Most will double or triple the daily performance either up or down. These can be especially dangerous products if you're on the wrong side of a trade. It's not unusual to see losses of 20% to 30% or more over the course of several days if there's a negative catalyst.
Source
Originally published at www.fool.com.
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