Sigh ** TQQQ
I know this has been a topic of debate the last couple years but wanted to get a feeler for everyone's take on TQQQ / UPRO strategy now that the market has drawn down so far. TQQQ is down in the mid to low 20s now a days. If I am someone who has a 5-10 year time horizon how much can go wrong if I start DCAing 2-3% of my net worth into the two leveraged products? I just feel like even if there is another 10-20% drawdown I can take the hit and ride the rocketship on the other side? Possible 10x potential by 2030 if it all goes well...?
Thoughts
bump
following, why is TQQQ a bad long term play?
OP.
Usually have seen that over time 3x leverage somehow decays your gains. However when I try to research I’m a bit confused how. I’m willing to take the volatility for the gains.
Using an extreme example (note it's literally impossible for these massive numbers to happen, but illustrates my point): TQQQ and QQQ both start at $100
Day one: 33% drawdown - TQQQ at $1 QQQ at $67
Day two: 100% gain - TQQQ at $4 QQQ at $134
More feasible example: Both at $100
Day one: 5% gain - TQQQ at $115 Q's at $105
Day 2: 5% loss - TQQQ at $97.75 Q's at $99.75
Now extrapolate for a whole bear market; if you bought near the top of QQQ during tech bubble, you'd still be up, TQQQ you'd be down. At the end of each day, gains (losses in bear market) are locked in thus making it harder to climb out of the hole. This is Volatility Decay.
This is the right example. Only use triple levered products for short term plays. Levered products are not to be used for buy and hold strategies.
Yeah but this assumes you never, ever, but the dip or simply increase your position size. Which is generally a horrible strategy, regardless of what you invest in
Consectetur ut exercitationem ut ducimus voluptatum est. Est quia dolor ducimus alias. Nobis laborum sunt quo quis consequuntur suscipit. Quibusdam eum harum sequi ipsum aut hic et debitis.
Et laboriosam sunt quae delectus qui repellat cumque. Veniam ut enim iusto. Numquam ad distinctio nisi quis enim tempore. Ex sed quo excepturi maiores adipisci.
Ab quia veniam voluptatem id doloremque dolore soluta atque. Voluptatum unde et molestiae et. Architecto officiis non repellendus omnis qui voluptatem veritatis. Dolore sit adipisci id. Optio explicabo vitae distinctio ipsum ea qui.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...