The Myth: 3x ETFs good only for short term...

Discussion in 'ETFs' started by MoneyMagnet, Oct 9, 2021.

  1. Leveraged ETFs employ such a horrible rebalancing strategy. You're far better of manually running a strategy in leveraged futures or QQQ that can take some heat before downsizing. Likewise unconditionally levering up on favorable price moves is only a great strategy in hindsight.
     
    #31     Oct 11, 2021
    murray t turtle, Butterfly and Nobert like this.
  2. Here's UOPIX (leveraged Nas fund... red) vs QQQ back to late 1997. I'm sure y'all can justify anything that suits you about this. :)

    UOPIX VS QQQ.PNG

    The big decline on the left in UOPIX was from 147.99 to 6.47, according to FastTrack. It's leveraged "only" 2:1. TQQQ, which wasn't around back in the late '90s, is leveraged 3:1. Had it been around then, it would have suffered even a bigger percentage loss.

    Worst case scenario here if you're a B&H-er... you might have been holding for ~10 years while sitting on ~96% loss. Not sure how anyone can justify that nor can his investing psyche handle it. (I have a trader friend who is doing something similar... he shorted in 2011 in a leveraged ETF and is still holding.)
     
    Last edited: Oct 13, 2021
    #32     Oct 13, 2021
  3. I was able to redo this from the 1st common date in 1999. This time QQQ is red.

    UOPIX VS QQQ.PNG
     
    #33     Oct 13, 2021
  4. fan27

    fan27

    Moral of the story...trade in the direction of a nicely moving trend.
     
    #34     Oct 13, 2021
    KCalhoun, murray t turtle and yc47ib like this.
  5. %%
    Good points;
    but'' close'' doesn't really count except horse shoes + hand grenades.
    And its not a'' bet'' even though i see your point on some diversification. OK
    Almost impossible for SPY to drop 33.3% in one day;
    but I've read the multihunderd page annual report/prospectus.
    Some funds allow this \ say SPY+ it dropped 33.3% OCT 19, 1987;
    some allow for settling OCT 20, 1987. IF that makes no sense dont worry + read the prospectus
     
    #35     Oct 14, 2021
  6. Butterfly

    Butterfly

    buying Micro and mini NASDAQ futures is far more efficient, you get 10x and 0% management fee

    contracts as cheap as 2,500 USD for a 5x multiplier

    but regulatory oversight by the CFTC is far worse than anything, they ask you all kind of questions to make sure you are not a drug lord or gaming the market with some "offshore" hidden interests :)

    so looks like I will have to do with 3x ETFs now :p
     
    #36     Oct 16, 2021
    murray t turtle likes this.
  7. Butterfly

    Butterfly

    amen to that,
     
    #37     Oct 16, 2021
    Axon and murray t turtle like this.
  8. Butterfly

    Butterfly

    amen to that brother, but keep in mind that opening a Futures account these days is far more difficult than a regular trading account, CFTC rules etc...

    so access to Futures through a 3x ETF is also a nice and safer alternative for those who don't have the gut with Futures and the 10x returns it gives on traded indexes
     
    #38     Oct 16, 2021
  9. Butterfly

    Butterfly

    it seems that QQQ had a couple of splits so for price comparison, you have to be careful to adjust historical prices
     
    #39     Oct 16, 2021
  10. %%
    Amen to that;
    mostly
    Prefer TQQQ,spxl, qld/dividends;
    qqq very seldom\ except trying to prove a bottom not pick a bottom. I dont like stuff could possibly geta margin call under any case or get sued for the balance in RE loan.
     
    #40     Oct 18, 2021