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Investors Warned of Potential Systemic Shock from Leveraged NVDA ETFs

Investors Warned of Potential Systemic Shock from Leveraged NVDA ETFs

CointimeCointime2024/04/03 01:36
By:Cointime

The use of explicit leverage by some investors has led to an increase in risky securities, similar to the pre-global financial crisis period. This could result in another deleveraging-driven meltdown, with explicit and implicit leveraged positions in stocks like NVDA being particularly vulnerable. Leveraged single stock ETFs, such as NVDL, have been criticized for potentially violating the spirit of ETFs, and despite their legal status, they pose a risk to the market due to their high volatility and potential for systemic risk. Investors are advised to consider hedging against a potential shock by building protection into their portfolios.

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Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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