Your long-term investing goal is to build wealth over the coming decades in the safest, most reliable way possible. How about trying to get there using a wildly risky, short-term investing strategy?

That's the latest idea to emerge from the mad scientists' workshop also known as academia.

Leveraged ETFs-exchange-traded funds that typically aim to double or triple the daily returns of various assets-go rocketing up and down in the short run. This Thursday, for instance, when the S&P 500 rose a little over 1%, more than two dozen leveraged ETFs gained at least 20%-and at least seven lost more than a fifth of their value in a single day.

Nevertheless, new research argues that better-diversified leveraged funds are "potentially useful as a permanent component of investors' portfolios"-and that "a leveraged ETF would be a natural holding" for "younger investors whose financial wealth is small relative to the value of their future labor income."

I've got three problems with that.

First, the new study skips over the latest trend in this marketplace-a raging epidemic of leveraged funds seeking to magnify the daily returns of a single stock, commodity or cryptocurrency rather than a broader market index.

As of late August, according to FactSet, 612 out of 772 U.S. leveraged ETFs are based on a single asset instead of an index. Because they're undiversified, these funds are far riskier. Traders and speculators love them; investors shouldn't touch them with a 10-foot pole and a hazmat suit. It's hard to imagine anyone trying to hold these for life, but some people might.

Second, markets don't always trend upward.

Leveraged funds don't just amplify the daily gains of their underlying asset. They equally enlarge the losses. A "2X" ETF doubles the upside and the downside of the asset it's tied to. A 3X fund triples the gains and the losses.

So, when markets go down instead of up, leveraged funds go down a lot farther-leaving you far deeper in the hole than someone in an unleveraged fund.

My third and most important objection: Investors aren't superhuman. We are human. And, while human beings like pleasure, we hate pain.

Advocates of leveraged ETFs for the long run are fond of pointing to ProShares UltraPro QQQ, a leveraged ETF known as TQQQ that seeks to triple the daily return of the technology-dominated Nasdaq-100 index. Since TQQQ launched in 2010, it has returned nearly 35,000%. That otherworldly gain is light-years ahead of the Nasdaq-100's more than 1,800% return.

Who earned that gigantic cumulative return? My best guess is: absolutely nobody.

In the worst five weeks of the market's response to Covid-19 in 2020, the Nasdaq-100 index fell 27.8%.

TQQQ lost 69.8%.

In 2022, the index dropped 32.4%.

TQQQ lost 79%.

Between mid-February and early April 2025, the Nasdaq-100 was down 22.8%.

TQQQ lost 56.9%.

The human mind isn't made to withstand that much short-term pain, no matter how much greater the potential long-term gain might be.

The latest proof of that principle is right before our eyes.

In the first five months of this year, South Korean stocks more than doubled. Right on cue, at the end of May, fund managers launched the country's first leveraged ETFs tied to single stocks. Eager individuals poured in trillions of South Korean won, or billions of dollars.

Then, over six brutal weeks in June and July, South Korean stocks crashed roughly 40%. Every down day, the leveraged ETFs multiplied the daily losses. Hundreds of thousands of Koreans sold in a frenzy.

Chris Murray and Marco Sammon, researchers at Harvard Business School who study ETFs, estimate investors in 10 of the largest leveraged South Korea funds listed in Asia sacrificed $21 billion by piling in near the peak and bailing near the bottom.

To mollify furious traders, South Korean regulators suspended new approvals of leveraged single-stock funds. South Koreans who still want to trade these ETFs have to take an online training course and maintain a cash balance of more than $20,000.

Nevertheless, a new research paper analyzes data from 2011 through 2025 and finds that over periods longer than one day, leveraged ETFs didn't destroy wealth, on average.

Therefore, the researchers argue, these funds can help long-term investors "to better achieve their financial goals."

The research wasn't funded by an ETF firm.

Robert Whitelaw, a respected finance professor at New York University, is one of the authors. Make two assumptions, he says: The long-run expected return on stocks is positive, and young investors have decades of labor income ahead of them to offset the risks of market crashes. In that case, says Whitelaw, "maybe we should be telling young investors that they should actually be levering up, and that this is the tool to do it."

When I pointed out how badly leveraged funds had done in many bear markets, Whitelaw said: "That's the nature of risk. Sometimes you win, and sometimes you lose. Can you stomach the fact that you could lose almost everything?"

Managers of these funds say most buyers hold them for short periods-days, weeks, maybe a few months. As Michael Sapir, chief executive of ProShares, told me this week, "No one should invest their entire life savings in a levered investment."

In my view, buying a leveraged fund and holding it for the long run is appropriate only for people who can spend the rest of their lives in a sensory-deprivation tank. Maybe decades of floating in darkened silence would insulate you from the sheer terror of losing most of your money over and over and over again.

Otherwise, forget about it.