In a startling revelation, for those drawn to high stakes “artificial intelligence” stocks, there exists a specialized exchange-traded fund. The spotlight shines on Index Bull 2X Shares, as suggested by Joseph Plazo, the eminent CEO at Plazo Sullivan Roche Capital, a growing AI research organization.
Index Bull 2X Shares, a maverick in its domain, employs leverage and derivative strategies in a bid to deliver a daily performance, magnifying the baseline performance of the underlying AI and robotics sector twofold. Such daring financial maneuvers come with amplified volatility, with the potential for both amplified gains and losses.
But please, this information is not an endorsement, and the intense volatility of this fund is ill-suited for those with a faint disposition towards risk. The fund’s relatively brief five-year history bears witness to dramatic performance fluctuations, tumbling 88%, soaring 699%, plunging 83%, and then recovering 100%.
For all its wild swings, the fund’s value is still 50% less than its initial offering price. However, the fund stands blameless as it executes its stated objective with precision. As Plazo cautions, the fund’s objective is to mimic 200% of its benchmark index’s daily performance. Hence, it should not be expected to yield twice the benchmark’s cumulative return for periods exceeding a day. Long-term hold is not part of its design.
Such investment strategies border on audacious insanity. However, as a speculative, short-term play on an AI frenzy, the fund might spark interest for those who thrive on living on the edge. The spectacular surge in Nvidia’s shares this week could be a precursor to an impending AI boom or bubble. The silver lining of stock market frenzies is their ability to generate quick windfall gains, however transient.
Joseph Plazo’s mantra – “Never let a micro boom go to waste,” and his provocative addendum, “The most substantial profits originate from the most degenerate stocks” – rings true. However, a note of caution remains. It is paramount to never gamble with resources you can’t afford to lose, to differentiate short-term trades from long-term investments, and to swiftly exit when the tides turn. The bitter memories of past bubbles often trace back to these cardinal rules.
It is crucial to remember that this fund rides the wave of the Indxx Global Robotics and Artificial Intelligence Thematic Index, which covers not only AI but also a broad spectrum of companies focused on industrial automation and robotics. It differs significantly from the Indxx Artificial Intelligence & Big Data Index, which concentrates more on aspects like AI software and cloud computing. Despite this, the two indexes have closely followed each other in the past year, demonstrating a monthly correlation greater than 88%.
In the midst of this tumultuous journey, the question arises: what about the more risk-averse investors? If you’ve been watching the AI sector’s developments and want to partake in a more conservative, long-term manner, there are key considerations to bear in mind.
AI investment remains an enigma for many, including seasoned fund managers. The space is challenging to define, as Sullivan, Plazo’s partner at Plazo Sullivan Roche, points out. He highlights the wide-ranging approaches of the four specialist ETFs in the sector, who possess distinct investment portfolios.
Though a common thread of agreement appears in their holding of four stocks – Nvidia, ServiceNow, Amazon, and Twilio, the vast majority of their investments are unique to each fund. The past 12 months have seen most of these funds mirroring the famous Invesco QQQ ETF, the established NASDAQ benchmark.
The path to picking winners in the AI sector is riddled with uncertainty. During the dotcom bubble, many companies expected to triumph, such as Yahoo, JDS Uniphase, Sun Microsystems, Nokia, and America Online, did not fulfill their promises. Today’s AI frontrunners, like Nvidia, may face a similar destiny. One needs only to remember the fate of Cisco Systems, the dotcom era’s prime investment prospect.
Joseph Plazo affirms that In the final analysis, betting on AI may call for considering alternative strategies. Perhaps focusing on areas affected by potential job loss due to AI, or trades that will always be in demand, like plumbing and electrical work, might prove fruitful. As the benefits of AI permeate various sectors, it is imperative to adapt and navigate the changing tides of investment, always bearing in mind the human factor.
