'When it started to fall, I bought more because I couldn’t believe how low it was going', he said in a telephone interview. 'I didn’t realize I was playing with a hand grenade'.
Gamble, who lives in Frisco, Texas, didn’t know the product was trading at a premium to its targeted value, a rare event for ETNs, or that institutional investors were selling the notes short on a bet they would fall. The note tumbled by more than 50 percent on March 22 and March 23, costing Gamble about $20,000.
The crash calls attention to the way many ETNs, which are more complex and risky than exchange-traded funds, open the door to markets where individual investors normally can’t venture without brokerage approval. It also may sour small investors on exchange-traded products, an industry that has grown to almost $1.2 trillion in U.S. assets because of the popularity of low-cost ETFs.
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