Jul. 19 at 8:16 PM
Leverage is showing its ugly side this week.
High-beta tech trades took a major hit as volatility exploded. The 3x semiconductor ETF
$SOXL dropped around 29% this week while the broader semiconductor index
$SOX fell roughly 10%, pushing the sector into bear market territory.
SOXL is now down more than 50% from its recent peak, showing how quickly leverage can amplify losses.
Other leveraged products saw similar pain.
$IBX fell sharply compared with the move in
$IBM, and
$SPCX also experienced a major drawdown versus its underlying exposure.
The lesson is simple: leverage works both ways. It can accelerate gains, but during market stress it can destroy capital faster than most investors expect.
