One of the major thorns in the side of traders and investors has been the advent of the triple leveraged ETF. Somehow regulators did not see a problem with leveraged ETF's so they allowed double leveraged ETF's. A short while later the SEC approved the triple leveraged ETF. Brokerage firms such as TD Ameritrade that share widely held, client positions have been on record stating the many negative positions their clients hold in leveraged ETF's. Well as of this week, if trading wasn't hard enough, the SEC approved the first ever QUADRUPAL leveraged ETF's!

Now I am very biased here and am not a fan of leveraged ETF's. A search through our archives will show numerous articles about the few pros, and many cons of investing or trying to trade leveraged ETF's. Despite many complaints and objections, the SEC approved a pair of quadruple leveraged ETF's. The ETF's are brought to you by ForceShares and the first is a long market, futures fund which will trade under the symbol (UP  ). The fund is designed to return 400% of the daily performance of the S&P 500 stock index futures. The other is the inverse of the long fund which will attempt to return 400% of the inverse of the same benchmark.

Can anyone tell me why this is necessary? Think about how volatile this product will be. If the S&P 500 had a 1% down day you could theoretically see a 4% jump in (DOWN  ), or take a 4% loss in UP. And, is there any reason you would hedge with these products? Maybe that is it. One could purchase a small amount to hedge a large portfolio? No, that would not be wise either due to the sheer cost associated with the negative drag on the product. In other words...fees.

The last question is, where does this stop? Why stop at 4x ETF's? What if the SEC approved a 5x fund? 10x? 100x? At what point do they say enough? Look, to sum this up, stay away from these products. The fastest way to get rid of these products is if we all avoid them. If no one comes to trade them then they will go belly up. The sad part is this will likely be a very popular product, ultimately ruining the accounts of the uneducated or under-informed.