SOXS is a high-risk 3x leveraged ETF; leverage destroys staying power and can lead to total loss, so avoid it.

ETFs. they'll have to basically sell into red at the end of the day. And so that sucks. Like Socks is going to have to sell at the end of the day. And sometimes that actually leads the market to sell off worse at the end of the day.

Uh because they're basically selling into weakness. And usually our logic is, oh, we should be buying into weakness. Uh but that doesn't work with leverage. As usual, leverage is is the the death nail.

Uh, and so I I love the components in socks. I think there's some fantastic companies in there. Uh, you know, but but leverage will kill the staying power.

Cody who's 35 just asked, "Hey Kevin, I full ported into Socks at the top, which is a 3x leveraged semiconductor ETF. What do I do?" Here's the first thing we have to know. A 3xle leveraged ETF carries a lot more risk than just these fundamental holdings, which these are fantastic companies.

But on a day when Samsung misses expectations for their buyback and they come in at basically half of the most bullish estimates for their buybacks, the entire market goes down.

And it could be literally something as silly as expectations getting missed in South Korea that brings an entire semiconductor index down. That in alone is one of the greatest lessons in avoiding leveraged ETFs, especially 3x leveraged.

Did you know there were applications for 5x leveraged ETFs? The SEC actually finally put their regulatory pants on and canned those applications denying anything over 3x leveraged.

And thank goodness they did because in July all of those 5x leveraged ETFs would have gone to zero. And the thing about a leveraged ETF is when it goes to zero, it doesn't come up again.

A 3x leveraged ETF only needs to see 33% selling on average of the underlying stocks approximately. We're rounding here to see the entire index go to zero and then it's liquidated. and liquidated mean at at zero means you get nothing back and it's not bouncing up.

If Nvidia goes down, even if Nvidia goes down 80%. Just to be ridiculously extreme, it's not going to zero. And that psychological driver is unfortunately why most people are going to sell out of a leveraged ETF at the worst time.

It means you buy at the worst time and you sell at the worst time. That's the unfortunate psychology because you know on the way down there's a risk of it going to zero. So you have people who would otherwise diamond hand an individual stock that can't diamond hand a triple leverage because they know there's a chance it's actually going to go to zero.

Obviously any company could go to zero, but you know I would say uh 10,000 3x leveraged ETFs will go to zero before a company like Nvidia goes to zero, right? So there's a possibility to each.

It's just probabilities for all of them. Now, while I can't give personalized financial advice to Cody, one of the things I find is that if you're thinking about that darn index every single day, you're probably overexposed to a single security.

And one of the easiest ways to take the emotion out of it is set a trailing stop. So that way Nvidia earnings come in and the entire semiconductor index rebounds because we get over some of the Kevin Worsh or Scott Besson concerns or Iran D-Day concerns and this puppy rebounds like it deserves to.

Great. Then your floor of selling has moved up. He said a 20 30% trailing loss. That thing moves up nicely. Great. And then if it goes down again and you ding out, you ring the bell.

Great. You just picked up some extra capital. But if it keeps going, at least you've removed the emotion and you don't ride it to zero. Personally, I think the lesson in all of it, and I know it sucks for Cody's situation because he's already in it, but I think the lesson to everybody else, if everybody else can win from that, is leverage is exactly what destroys in the stock market.

Best case scenario, you're allocated in such a way it doesn't matter if Nvidia goes down 80% because you look at it and go, "Whatever, it's on sale. I'll buy a little more. I know it's not going to zero."

Nvidia is a great company. The components of the Philadelphia Semiconductor Index, they are great companies. AMD, uh, Taiwan Semiconductor, Broadcom, what a fantastic company. The ASIC chips that Marll and Broadcom are making are really the future of AI on cheaper chipsets.

These are fantastic companies, but you could get paperhanded out of fantastic companies because of leverage. Stay away from leverage. Hopefully that's helpful.