Leveraged ETFs: TQQQ vs QQQ -- Buyer Beware

[@smorgan125]

Definitely helpful and informative but I'm still not convinced. All in TQQQ.

[@thynnus2422]

I just came across your channel and appreciate your perspectives on investing and how you present them. It is a shame that the KZbin algorithm seems to reward videos with clickbait thumbnails and titles that just tell people what they want to hear instead of factual, logical, informative videos like yours.

[@Elvis00026]

Still not convinced, the difference between 3X and the asset is the price to pay for not being margin called. If you dollar cost average and use it to be a 5-10% of a portfolio still don't see any issue. Thanks for the video.

[@horizontaldad]

Excellent…. Many warn about TQQQ but you really explain how …. The QQQ could also be a problem but it’s top 10 holdings are in many many ETFs and mutual funds as well

[@donhosbf]

I get the argument. But look at 2009! It made it all back and quite a bit more. Scary as cats. I will let it ride

[@VaskoGG]

Thank you for the video, Rob! Very good explanation of the leveraged ETFs pros and cons. I believe one can hold a small position in TQQQ if we see a drawdown of the NASDAQ this year. We don't loose anything unless we click "sell" in our brokerage :) Keep up the good content!

[@baylorbear0358]

Would you tell an investor to ignore the last decade of past growth and profit if it involved a regular common shared stock?

[@OGBhyve]

The standard deviation of nearly 50% during those 10 years scared me off.

[@chrisbentsen1]

The gains in the up years are so good that I think it would be worth investing in this that even if a bad year caused you to lose 95 percent.

[@555125kevin]

as long as you don't sell while being down tqqq is really profitable.

[@umangpatel9599]

What if we invest for 10 year or more? As per past data it result very well... Is it good if we invest for 10 year?

[@maa11235]

So can one end up owing money (the etf falls by over 100%) when investing in a leveraged etf?

[@Karletto-87]

Great video post Rob! Thanks for managing to explain certain ‘complex’ investing materials in simple layman terms. Keep these videos coming!

[@george6977]

I read an article by one of the Long Term Capital Management experts which concluded 2x or 3x leverage wipes you out eventually. The optimum leverage is 1.5x if I recall correctly. I saw Bloomberg’s ETF IQ, probably in 2008, were a 2 or 3x leveraged ETF lost 98% of its value and was closed down, returning the remaining 2% of the investment, so the ETF managers crystallised the lost.

[@lairdherron8202]

Very insightful, thank you! It would be interesting to model out the hypothetical TQQQ performance in 2000-2002 and 2008. To help validate the claim that it would go to zero (I assume we could do that given we know how TQQQ moves). Also, I'm curious why the COVID crash didn't make TQQQ go closer to zero. QQQ went from ~ 234 to 170. Or a 27% drop. While TQQQ went from ~ 59 to 17. Or a 71% drop. Why was the drop not larger? Is that because the QQQ drop was over a shorter period of time than the longer Nasdaq bear runs of 2000-2002? Thanks again, I love your style of videos!

[@prof.m.abbas83]

Very simple how things can go wrong: start with a $100 First day it goes down 20% and then second day goes up 25% and you are back to your original $100. With Tqqq, it would be down 60% and then up 75% leaving you with $70 instead. So in a sideways market , it could be detrimental as well. And of course in a down market. Unfortunately some people joined the market and have only seen a market rising consistently, where tqqq of course made it look like magic. But wait till you witness the other two cases. Then again, everyone learns the hard way by experimenting on their own. If you badly want double leverage, your safest choice is with a deep in the money leap call options.

[@trapcracker]

Thanks for doing this Rob! I asked about this during the livestream.

[@keystoneskiguy2718]

I just ran this on my software. TQQQ vrs QQQ performance as of today. One year return TQQQ 59.97% One year return QQQ return 21.91%. Three times 21.91% = 65.97%. 6.02% slippage due to rebalancing over a 12 month period. Best for swing trading. You folks don't like any kind of trading.

[@ImOnUToob]

Exactly what I needed to know, thanks Rob

[@narindersharma303]

always buy sqqq in September and tqqq in November, based on historical data.

[@BrokeToSemibroke]

Very helpful and informative. This is what I wanted to know for a very long time. Thanks.

[@nibpicky]

For a couple years already, I’ve allocated 1% of my portfolio to TQQQ and UPRO and plan to hold it for 20 years. Either it’ll worth zero in 2040 or a few million.

[@RicardoHernandez-zr1pw]

I run TQQQ in a wheel by selling covered calls and secured puts. Easy money 💰 when it’s managed correctly. Holding it is also a great idea 💡 though.

[@berg8970]

TQQQ, SQQQ track /NQ, both are triple leverage and are not designed to be held long term, both have decay built in them.

[@whydidyoutubeaddthis]

Yup, if you're buying tqqq with the plan to hold it for 20 years then you're probably doing it wrong.

[@RicardoHernandez-zr1pw]

Nah. I think it’s fine if you sell premiums on it and manage it correctly. 💰

[@Ambassador055]

Bought some last week. Let’s have some fun.

[@FIRE_Dan_]

I think one great thing with TQQQ is the ability to sell calls against the position along the way to create even more income. Even a correction, one can sell calls to some degree and reinvest

[@RicardoHernandez-zr1pw]

TQQQ is my favorite investment!

[@bisonfan715]

Someone needs to show this video to Stock Moe

[@polymath5119]

Nicely done Rob

[@calvinlong1321]

US market is bullish long term (always come back), the long-term return of *compounded* high rates is enormous. Since wiped out is the main concern, applying 50% trailing stop would save half of the profit (likely still be significant) and keep enough base to go back in. (small % could stop out too often and miss the following come-back gain) Dollar Cost Averaging the back-in (space out over time) also helps the market turbulence.

[@adamcaruso6345]

I've never seen an ETF perform so well and yet be so hated. Check out how much I've made from TQQQ in the past year.

[@KingofPentacles69]

buy tqqq on dips, sell on rally

[@ilovenarwhales]

the upsides of TQQQ and SOXL are almost never talked about. It's all about the risk, which is misleading.

[@brianh6]

What you are saying about the 2000 to 2002 period is true. Some people have calculated how tqqq would have done if it existed back then. The drawdown would have been 99.9%+. The drawdown in 2007 to 2008 would have been similar. One author calculated that if investing in tqqq at some point in 1999 roughly 20 years later it would be up 27% versus qqq being up 700%. For those feeling compelled to speculate in leveraged etfs with some small percentage of their portfolio and just hold for many years 2x etfs are the way to go. Large drawdowns will reduce them a lot, but it's significantly harder for them to get wiped out. So they can still outperform the underlying index even with large drawdowns. 3x etfs will essentially get wiped out at some point. My plan is to put maybe 1% of my portfolio into tqqq after the next 50%+ correction in qqq whenever that may be and sell at some point. Since any drawdown like 2000 to 2002 or 2007 to 2008 will essentially wipe it out, selling is mandatory.

[@jamesrockford2626]

it would have went under both times. The market only needs to go down 33% for TQQQ to go under. They could in theory keep reverse splitting but eventually it would go under $1 and be delisted from Nasdaq and would go bankrupt. Not sure you know this but the "T" is for triple. For instance in April of 2020 all the Triple Oil etfs went under. Good luck with your 1%. You will lose it.

[@humphreypalmer5308]

Haha.. lets go back 90 year to prove a point.. when if you invested 10K since 2010 in TQQQ and did nothing.. you have 1mil today.. and its up 86% YTD.. Tech today is not tech of 20 years ago.. Trust the data and make your own decision.. I invest in TQQQ and I hold long.. haha dont fall in love with the data... lol

[@78katz]

TQQQ is the American Dream stock. Just be prepared to sell on severe corrections.

[@noahizsak8128]

Bro what you wanna sell everytime there is a sever loss?

[@mr.wrongthink.1325]

QQQ fell in 2020 covid downturn, and TQQQ fell even more. But recovery was even steeper for TQQQ. The conclusion may be that as long as TQQQ does not fall to 0, it will recover steeply every time. Could TQQQ possibly fall to 0?

[@InvestingAlex]

Here is an idea swing trade the emini futures at least the decay happens once a quarter.

[@patricktuorto]

Thanks, I invested a $16.00 slice of Invesco QQQ & another $16.00 slice in SOXL 3x’s Bull Shares, I’m up and will be trading these two for a much more stable stock, I’m loving index funds so maybe I’m put those gains in VOO.

[@tonydeadlock]

I just have tqq with a sell order at a few dollars over my average price so if it has a massive drop hopefully my sell order will trigger

[@baylorbear0358]

It doesn’t wipe out your investment unless you withdraw your money. Just like any stock it took a significant hit during Covid or during the housing bubble it’s only a loss on paper unless you withdraw that money and take the loss. Holding those shares and waiting for what could be a potentially significant rebound is the same strategy you would use in holding any stock. And while I understand it’s a risky investment you really highlighted the absolute worst of the worst and the most negative of the negative even if that was only one or two years and broadly ignored the extremely positive years.

[@Q8Patriot]

Well explained, thanks alot

[@Sylvan_dB]

This is a very good illustration of *what* can happen. I'm still trying to figure out *why* it happens and how the daily reset figures in. I think I might understand, but there's no way I could explain it. It feels kind of like it is flitting around the edges of my mind or "on the tip of my tongue" but I'm not quite grasping it.

[@johntamulonis4626]

Great info!

[@milanjurich1526]

Hi Rob … not a leveraged ETF, but what about a product like SWAN ETF … 90% IT Treasuries/10% S&P70% Leap Options for a Defensive Hedge in a sharp downturn? Thoughts?

[@JK-rv9tp]

Yes those are casino funds. I have a little bit in a much more conservative leveraged ETF, HDIV, that leverages a basket of CC ETFs representative of the Canadian market by a modest 25%, to goose the monthly call premium and dividend income by 2-3 points. It pays 8+ points monthly and seems to have only marginally more volatility than its associated unleveraged index.

[@devongonzalez2037]

you should have 100% of funds into TQQQ when swing trading.

[@ExileOnMyStreet]

Not a long term hold, perhaps allocate a small percentage of your portfolio and take profits on any huge runup.

[@jvalue7204]

Great stuff, looks like we share similar ideas!

[@vinyl1Earthlink]

What is the reason for this? Let's take a simple example. The index goes down 10% in one day. What does it have to do to get back to even? Go up 11.11%. OK, let's say that happens the next day. Now what happens over at the EFT? Day one, it goes down 30%. Day 2, it goes back up 33.3%. Is it back to even? No, it's still down 6.7% for the two days.

[@jjt171]

Okay, and show me a real world example where a stock goes down 10% and goes up 10% the next day every day for a significant amount of time.

[@mangar3147]

Buy tqqq after a market crash. Get rich

[@RicardoHernandez-zr1pw]

Yeah just look at what you could have made if you bought the March 2020 dip and held till today! Big gains! 💰

[@wilson5846]

for real I had no idea, even with holding 20 years it's still risky ? :( but I like big gains lol

[@ghostoferlock]

Enjoyed the video, and it explains more about leveraged ETF's, and helps with choosing if they are good for an investor. I think that as a buy and hold investor they are helpful, as long as the market is climbing, but as mentioned, what about markets when they fall ? Leveraged ETF's look like a good purchase when markets are climbing from a bottom. Seeing as they can be showing different returns from indexes, they almost seem like a good investment as part of an account. Even when an investment seems to be great, speculating with one investment can destroy an account. Please leave 5 % in an investment, at most. I am curious if holding a leveraged ETF, and inverse leveraged ETF would increase an account value. If someone bought into both with a deposit of $5,000 each, how would that play out ?

[@jamesrockford2626]

Not sure why you need a 20 minute video for this. It's pretty simple. If the Nasdaq goes down more than 1/3 your will lose all you money in the TQQQ. It's that simple. In 2020 it came within a few % points of going bankrupt. They could in theory keep reverse splitting but eventually it would go under $1 and be delisted from NasDaq and woudl go under.

[@alphabeta8403]

Blah blah blah TQQQ >> QQQ LONG TERM