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Billions of dollars in net inflows arrived at leveraged single-stock exchange-traded funds during a chip sector sell-off, even as those funds were falling sharply.
A leveraged single-stock ETF is a product that multiplies the daily price change of one individual stock, meaning it drops faster than the underlying name in a downturn and rises faster in a rally.
Buyers kept arriving throughout the decline. That trade has a name in markets: catching a falling knife.
The phrase describes buying into an asset that is still in active decline, on the expectation that prices are approaching a floor.
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