Leverage

Daily-reset leveraged funds suffer volatility decay: a 2× fund does not deliver 2× the index over time, because losses compound against you (drop 10% then rise 10% and you are below where you started — doubled). Sideways, choppy markets quietly grind them down.

Leverage also converts a survivable drawdown into a fatal one: a −50% index crash is −80%+ at 2-3×, deep enough that recovery takes decades. Our multi-regime tests found leverage won only in the regimes you'd have to predict in advance — which is the original unsolved problem.