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
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