My assertion is that Inverse, Leveraged, and Inverse Leveraged funds should be outlawed as they are now. These funds are primed to siphon money away from retail market participants and are the biggest offenders of market manipulation.
To expand on this, while they may provide good returns when functioning as a true reciprocal, the largest issue is twofold, first is that they are generally swap based, secondly is that their split date and decay is extraordinarily predictable under most circumstances.
Normalizing the closing price of sqq vs the reverse splits it becomes apparent that they are set as if they are an oscillating harmonic function. More interesting is that when the behavior approaches an expected boundary too quickly a flag seems as if it gets triggered thus within approximately 1/2 months of a boundary being achieved a split occurs. Due to the nature of this it becomes very apparent that it is an algorithm likely governs and monitors this, and likely gives flags far beforehand. Occams razor suggests that if it is an algorithm then it is likely it is well propagated amongst all major market makers.
Which is why they necessitates either heavy regulation or just taking them off the market.
I have provided graphs I generated for it, which accounts for all closing prices of sqqq normalized vs splits.
The math for the boundaries is based on the absolute max of each period and absolute min of each period(respectively) as parameters for the boundary conditions as well as the assumption that the behavior of the boundaries is exponential in nature. to approximate the boundary conditions.
Both graphs go back to inception, orange line one has dara on the right that I added to see how a randomized approximation would hold up. A portion of the last oscillation is based off of assumed normal market conditions.
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