When Effect Leads Cause: Nikkei 2x Levered ETF Activity Up 1158% YTD

Tyler Durden's picture

"If you think it is going to rise, you may as well double your return," is the risk-schmisk perspective one Japanese strategist notes, that appears to permeate every aspect of investing nowadays. If ever the herding recency-bias-based mentality was evident it is Japanese ETFs (which as everywhere in the world have become the primary liquidity driver - along with futures - of the underlying stocks on every exchange in the world). The double-levered Nikkei 225 ETF in Japan has seen trading activity rise an incredible 1158% year-to-date (while the broad Topix index has only seen a more 'normal' 17% rise in the same period). While institutional volume still dominates, individual investors (enamored of the crack-up boom in equities this year) have piled in like never before with 28% of Japan's trading volume now retail. This won't end well.



Source: Bloomberg

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Dr. Engali's picture

Hell if you're going to lever up do it right. Mortgage the house, max out the credit cards, go to a payday advance and get a loan, take the jewlery to the pawn shop, put it all in a margin account, and swing for the fences. This is the last hurrah..go for it mother fuckers! 

AlaricBalth's picture

Reminds me of the 1980's Vancouver Stock Exchange penny stock boom and bust. Had a guy at Blinder, Robinson pitch me on some ideas. Most people got crushed. This ETF will be just the same.

pragmatic hobo's picture

global equity market is in a bubble. How else to explain a major stock like UPS hitting 52 week high one day then the next day the company issues profit warning? What are stock analysts doing?

PiratePawpaw's picture

This wont end.      Well?

fixed it for ya.

alphamentalist's picture

oh the stories i could tell about the numbnut instos that always show up in japan at the wrong time to lose money. to avoid violating my secrecy agreements, let's just say i've seen this show before and the ending is always good for a laugh.

Yen Cross's picture

    I think Japan is in for a rough week ahead. The usd/jpy looks heavy on the daily chart, and the dollar isn't bouncing as hard as I thought it would. As a matter of fact, the dollar looks heavy to me.

PiratePiggy's picture

How about the US Profund version?  DXJ gets all the press, but we have the 2x Nikkei as well:





tyler's picture

If it was silver you'd be estatic?  the talkative One I am, don't take my wisedom as a weakness.  Trend setters like most you fellas I don't respond to cuz it's not as fun making money in prison.  Out here I can drive fast and look at tits, real ones.  

JamesBond's picture

Skirts in Tokyo are also levered up 2x this summer.

Hell yeah!