Getting rich quick has never seemed so easy … or so dangerous.
Across Wall Street, a new breed of “superpowered” exchange-traded funds (ETFs) is drawing in everyday investors with the promise of instant profits.
These funds aim to double or even triple the daily return of a single stock, turning ordinary names like NVIDIA, Tesla, or Apple into rocket fuel for traders chasing the next big win.
It sounds irresistible. Who wouldn’t want to make twice as much as the market in a single day?
But behind those dazzling gains lies a harsh truth: the faster you try to get rich, the faster your money can vanish.
Leveraged ETFs, Wall Street’s new slot machines.
These new leveraged single-stock ETFs aren’t built for long-term investors. They’re trading tools, engineered for professionals who understand that their performance “resets” every day.
Hold them longer than that, and the math starts working against you.
Yet billions of dollars are pouring in. As of this fall, nearly $29 billion sits in leveraged single-stock ETFs — much of it from individual investors hoping for a joyride that turns into a jackpot.
But that “jackpot” often turns into a bust. The longer you hold, the worse your odds become.
Daily compounding distorts returns and amplifies volatility. Even if the underlying stock stays flat, you can still lose big.
In the world of investing, that’s like flipping a coin where the house always wins.
Fast Money, Slow Disaster Ahead
Consider this: one fund manager in Iowa recently shut down his leveraged tech ETF after discovering that the hidden costs were eating him alive.
The financing expenses on the swaps that power leverage ran more than 1.7% a month, or 20% a year. If a professional manager with decades of experience can’t make it work, what chance does the average investor have?
It’s the classic trap of Wall Street’s latest gimmick: the illusion of speed without understanding the risk.
That’s why at American Prosperity, we take the opposite approach. We don’t gamble on what could go up tomorrow. We invest in what will still be standing 10 years from now.
Real wealth isn’t built in days or weeks. It’s built through ownership, buying great businesses that generate profits, create value, and compound your capital year after year.
That’s how Americans have always built prosperity — by owning the companies that drive our economy forward.
At American Prosperity, we focus on three timeless principles:
Own what you understand. If you can’t explain it, you shouldn’t own it.
Invest in great businesses, not trading vehicles. Over time, the stock price follows the business. So focus on the business.
Let time be your greatest ally. Compounding works best when you don’t interrupt it.
As Warren Buffett once said, “If you aren’t willing to own a stock for 10 years, don’t even think about owning it for 10 minutes.”
That simple rule has made more millionaires than any leveraged ETF ever will.
Shortcuts to Riches Usually End in Ruin
Wall Street Journal columnist Jason Zweig is one of the sharpest minds in financial journalism.
In his recent piece, “The Hidden Cost of Playing the Stock Market’s Slot Machine,” he exposes how these funds quietly drain investors.
Zweig explains that the “base rate” on the swaps used to create leverage typically starts around 6%, but spikes even higher when volatility increases. “A 15% [annualized] rate doesn’t sound outrageous at all,” one fund executive told him.
And because those costs don’t appear in the expense ratio, you’ll never see them coming. They’re quietly deducted from the fund’s total return — day after day — until what looked like a cheap way to make fast money turns into an expensive lesson in financial gravity.
Zweig cites new research from Arizona State University showing that these ETFs underperform their targets by nearly 10% per year due to these hidden frictions.
As he puts it, “The payoffs are going to be more complicated, more risky, and more expensive than you might appreciate.”
You might hit it big once in a while. But more often than not, you’ll end up like every gambler who thought they found a system that beats the casino.
As Nobel laureate Paul Samuelson once said, “Investing should be more like watching paint dry or watching grass grow. If you want excitement, take $800 and go to Las Vegas.”
That’s the American Prosperity way. We don’t chase excitement. We build wealth.
Because when it comes to the stock market, you can either play the slot machines … or own the casino.
And the people who own the casino are the ones who get rich, slowly, steadily, and for good.
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Regards,
Charles Mizrahi
Prosperity Insider
