Transcription
Hey, good evening everyone. Welcome back to the channel. Thank you all for joining.
First off, I want to apologize for the sound quality in the last video. I don't know why that happened. All I can attribute it to is 21st century technology, which we would think would be cutting edge or the best that it's ever been, but who knows? Never had this problem on prior computers, so go figure.
Anyway, I want to cover some I guess it's not really breaking news now because it was announced a day ago, but the SEC is actually suspending uh new issuances of leveraged ETFs given the recent volatility in the markets that we've seen in the past month or so, which a lot of us have been definitely beat up, you know, by our plays that we have in certain leveraged ETFs, not all. Um, because some of them, you know, are coming back. I mean, uh I'll show you all on my next portfolio update. Um, I've got a couple of them that have come way back, but some of them definitely got very beat up.
So, let's cover the news articles. So, what we're going to start doing in these videos, for those of you all attend class live, when we introduce a concept or a subject, we're going to actually start with Google AI and then we'll pick our favorite articles and cover the subject uh more thoroughly if it needs it. And then I'll open it up to Q&A or live comments. So, like I always say, like, comment, and subscribe. I'll start saying that in the beginning of the video. So, if you guys could please smash that like button and comment away, it makes the video and the session more interactive.
So, let's start out with going over uh the actual news of of what's happened. It's not going to affect everything. Um, but basically just new funds. So, here's the gist of it. The Securities and Exchange Commission, the SEC, has halted reviews of applications for new highly leveraged exchange traded funds, ETFs, and sent warning letters to several issuers, including direction and proshares. How about that?
Now, region and ProShares have 3x funds. And a lot of issuers, and this has come up actually when I had Sylvia on last time, and a few other fund managers, I think Granite Shares and maybe even YieldMax, um maybe even Rex Shares, too. They all had prospectuses for 3x and 5x leveraged. I think they were ETPs or ETNs. But 3x and 5x is dangerous because if you think about it, all it would take is for say that the underlying is down 33% in a day and you're in a 3x fund. Boom. Fund is done. That's why typically what I understood the rules to be is that uh there was only 3x allowed on indexes, but we'll see. Maybe they're allowed on individual ones, but it's extremely dangerous. Obviously, you can make really good money on the upside, but when that thing drops, you can be done. You can be liquidated in a day or two if it's, you know, 30% or more down and it's a 3x. So, it's very dangerous.
So, they address concerns that these ETFs provide more than 200% exposure to underlying assets exceeding limits outlined by the Investment Company Act of 1940. Now, they've gotten around this before because we know there's UPRO, there's TQQQ, funds that I trade very frequently, but because those are on indexes, it's very unlikely that an index is going to be down that much in a single day.
So, the risk assessment, the SEC expressed concern that the fund's risk exposure might exceed regulatory limits compared to their assets. They're also questioning how fund managers determine the reference portfolio used to measure leverage risk. And then targeted leverage. The halt affects proposals for ETFs seeking up to 3x or 5x leverage with some aimed at volatile assets like cryptocurrencies and certain stocks such as Tesla and Nvidia. How about that? Nvidia has joined the club of volatile assets, volatile uh stocks.
Issuer responses. In response, some issuers like ProShares have already withdrawn their applications and I expect more to come. Investor protection industry experts have supported the SEC's move, viewing it as a measure to protect investors from the excessive risk associated with highly leveraged products. The SEC's public release of the letters emphasizes its firm stance.
And then disclaimer. Oh, I like this. Even AI has our standard disclaimer here. AI responses may include mistakes. For financial advice, consult a professional. Now, I am a professional, but I still say consult your adviser. I have that disclaimer, too, because I'm not necessarily a financial professional by definition. I've done very well in trades and things like that, but I have that standard disclaimer, too.
All right, so for all 20 of you that are on, comment away. Let me know what you all think about this. Were you all hoping for 5x and 3x towards the end of the year? Does this kind of put a damper on some of you all's aggressive investment plans? By the way, on a side note, I'm looking at um stable dividend portfolio, BTCI, FEP, and AIPI. Those are three of them. If I can get basically uh 35% return, think about it. If you have, you know, 200,000 that you're going to invest, boom, that's 70,000 per year. That's pretty good. That's like a full-time income. Retire early, right? Retire on dividends, right? Speaking of, maybe he'll show up. Welcome uh dividend degenerates.
All right, so let's go to let's see the first one. We've got Yahoo Finance. Let me do this here. Let me see. Uh, which uh fund companies have withdrawn their perspectuses? And just a word to the wise here. I mean, you know, this is obviously easy for anybody to do, but I prefer you all watch me do it. I like that better, right? And it's always fun and I get to read, too. So, it's a win-win. Um, okay. So, let's see here. Following the SEC's halt on reviews and issuance of warning letters for highly leveraged Ah, here we We're going to get some good info here. For highly leveraged ETFs, ProShares was the first to withdraw some of his perspectuses. The warning letters were sent to nine ETF providers, including direction, granite shares, and title. I knew it. The usual suspects, right?
Details of withdrawals and receipts. ProShares. The company confirmed it had withdrawn applications for various 3x leveraged funds, including those for cryptocurrencies. Others besides ProShares, the SEC sent letters to direction, title, granite shares, and themes ETFs. Very anti-thematic, right? Other actions. Some firms such as title and volatility have declined to comment while others are reportedly in discussions with the regulators. How about this? What nine firms were sent? This is pretty good. It kind of learns from you. Were sent letters about leveraged. Let's see what it says. Okay, so we've got direction, pro shares, title, granite shares, volatility shares, and themes. That's six, but it said nine the firms confirmed to be among Okay, so six out of nine. Some of the remaining, which are not explicitly named in every report, are also issuers of ETF. Okay, so here's a seventh one. ETF series solutions. So we've got seven out of nine. Keep in mind, AI responses may include mistakes. They said nine. They got seven. Should we give them some thumbs up or a thumbs down? Yeah. Well, before we get into thumbming anything, thumb me up, you know, first of all, like like the video for sure. So much for Levax. I know. I was looking forward to that. Right. What does he say? What are they suspending? New filings. Uh, yeah, only new filings. It's not existing ones. That would kind of suck. I How would they even handle that if they they'd have to liquidate the funds, I guess? I'm glad they're not doing that.
Let's actually ask AI. AI is becoming my new eightball, by the way. Uh, so, let's do this. Um, let's see. Would the SEC ever suspend any current leveraged ETFs? Let's just see what it says. It's like my new eightball. Yes, the SEC has the authority to suspend trading of existing leverage ETFs under certain circumstances. The recent action of halting new highly leveraged ETF applications does not prevent them from scrutinizing and potentially taking action against existing products. SEC's authority and rationale. So they've got a few mandates here. Protection of investors, concerns over leverage ETFs, past actions. They have a history of scrutinizing and intervening in markets where it perceives risks to investors. While the recent letters focus on new filings, the regulatory scrutiny could extend to existing products. I hope not. I'm in a lot of these and they're 2x. So honestly, um, the proshares products and the direction products, I have TQQQ and I had TNA. Those are all great. Uh, I also do SMCX. I do uh AMDL. I do NVDL. That's one of my favorites. I hope that I hope that there's no um what am I saying? I hope that there's no action taken against current leverage ETFs. [snorts] Uh, I definitely know that I mean we were in New York so YieldMax had the Levax. So those are probably going to be suspended. I would imagine the ones that Defiance had in the works are going to be suspended. Uh, so I think the future ones are going to be suspended. That's what it applies to.
Oh, so you guys know each other. Cool. Just recorded. What? Recorded what? YouTuber life. Yeah. Right. Okay. Well, you know, it's funny. In other news, I could become a full-time YouTuber sooner rather than later. I might I'll just share this to you all, but I might be um retired early. That's what we'll call it by the end of the year. We'll see what happens. But I'm pretty much set. Uh, like I said, you know, my uh 200,000 that I'm thinking about investing in new dividends since I freed it up from YieldMax. I'm looking at AIPI, FEB, and BTCI to name a few. If I can produce a 35% dividend yield, that's 70,000 a year. That'll cover all my expenses. So, I'm thinking about it.
All right, folks. Thank you all so much for tuning in. I hope this information was valuable. I sincerely hope the sound quality was better on this. Um, but again, this brand new MacBook, I can't control what it does. You know, I actually, he's so humble. I didn't even know he was a YouTuber. I'm actually shocked. He's like you, Rod. He's a very humble person. Um, I'll definitely sub to you. Anyway, all right, folks. Thank you for tuning in and we'll see you all in the next one. Take care. Bye.