08/11/2021
For example, hypothetically assume the S&P 500 Index is at 1,950 and a speculative investor purchases SH at $20. The index closes 1% higher at 1,969.50 and SH closes at $19.80. However, the following day, the index closes down 3%, at 1,910.42. Consequently, SH closes 3% higher, at $20.39. On the third day, the S&P 500 Index falls by 5% to 1,814.90, and SH rises by 5% to $21.41. Due to this high volatility, the compounding effects are evident. The index fell by 9.3%. However, SH increased by 7.1%.