The first chart below shows what the sector would have done with leverage back then... The gains here are astonishing. The leveraged trade soared 15,378% in just a few years... roughly 10 times the health care sector’s return without leverage. And we’ve seen it happen again in recent years... In January 2012, the health care sector had traded sideways for years. And at the time,
the uptrend didn’t look like much. But it was there, and it looked like it was on the edge of a massive rally. By investing with leverage, you would have crushed the regular return of health care stocks. Take a look at the bottom chart... This is a huge difference. More than 300% gains for leveraged investors... but just over 100% gains for unleveraged investors.
DOUBLE-LONG HEALTH CARE STOCKS
By investing with leverage, you would have crushed the regular return of health care stocks.
DOUBLE-LONG HEALTH CARE STOCKS VS. HEALTH CARE STOCKS
That tells us that investors hate the idea of owning health care stocks... which is exactly what we want to see.
56 September 2018
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