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TQQQ's 258% return over a single 12 month period makes it clear why the ETF appeals to long-term investors. Read what investors should know about TQQQ here.
- Beware Time-Decay Of TQQQ. SSO And QLD Are Better Long-Term ...
The bear market of 2020 had the highest daily decay in all...
- TQQQ: Hold Long But Not Too Long, A Data-Driven Analysis
TQQQ, a 3x leveraged ETF of QQQ (NASDAQ-100), provides great...
- Beware Time-Decay Of TQQQ. SSO And QLD Are Better Long-Term ...
- What Is Tqqq?
- But What About Volatility Decay For Tqqq?
- Drawdowns Are Important
- TQQQ Is TQQQ A Good Investment For A Long Term Hold Strategy?
- TQQQ vs. QQQ
- A Viable Strategy For Long Term TQQQ – Use Bonds with TMF
- What About DCA / Regular Deposits Into Tqqq?
- Tqqq/Tmf Pie For M1 Finance
- Conclusion
TQQQ is a 3x leveraged ETFfrom ProShares that aims to deliver 3x the daily returns of the NASDAQ 100 Index. Explaining how a leveraged ETF works is beyond the scope of this post, but I delved into that a bit here. Basically, these funds provide enhanced exposure without additional capital by using debt and swaps. This greater exposure usually comes...
The daily resetting of leveraged ETFs means the fund only provides the return multiple relative to the underlying index on a daily basis, not necessarily over the long term. Because of this, volatility of the index can eat away at gains; this is known as volatility decay or beta slippage. Unfortunately, the financial blogosphere took the scary-soun...
I'm not one to parrot the “leveraged ETFs can be wiped out” idea (thanks to modern circuit breakers, meaning mechanically TQQQ can't go to zero because trading would be halted before the underlying is able to drop by 33.4% in a single day), but if QQQ drops by 5%, TQQQ drops by 15%. People tend to focus on volatility decay and forget that major dra...
Probably not, at least not with 100% TQQQ. But there may be hope; stay tuned. The graph above illustrates in theory why a 100% TQQQ position is not a good investment for a long term hold strategy. Many are jumping into TQQQ after seeing the last decade bull run of large cap growth stocks, as TQQQ has only been around since 2010 and is up over 5,000...
So we need to go back further to get a better idea of how TQQQ performs through major stock market crashes, which we can do by simulating returns going back further than the fund's inception. Going back to 1987 for TQQQ vs. QQQ tells a somewhat different story: Notice how if you buy and hold TQQQ alone, it is basically a timing gamble that depends ...
The above graphs tell us 100% TQQQ is only a viable strategy if we can perfectly predict and time the market, which we know is basically impossible. So how can we make it work? By using a hedge to mitigate those harmful drawdowns. Diversification is your friend with leveraged ETFs. Treasury bonds offer the greatest degree of uncorrelation to stocks...
The backtests above buy and hold TQQQ with a starting balance of $10,000 and no additional deposits. Some will point out that an investor will usually be regularly depositing into the portfolio and that this would change the results. Since the market tends to go up and since major crashes are typically infrequent, regular deposits of $1,000/month i...
You'll need to rebalance a strategy like this regularly, meaning getting allocations back into balance since these volatile assets may stray quickly from their target weights. I used quarterly rebalancing in the backtest above. You might want to use M1 Finance to implement this type of strategy, as the broker makes rebalancing extremely easy with 1...
Don't go all in and don't buy and hold TQQQ – or any leveraged stocks ETF – “naked” for the long term without a hedge of some sort, because sometimes they simply can't recover from major drawdowns. The last decade has looked great for TQQQ, but don't succumb to recency bias. TMF is likely the most suitable hedge for funds like TQQQ and UPRO. For th...
Feb 5, 2021 · The bear market of 2020 had the highest daily decay in all three ETFs, about five- to six-fold the daily decay during the 2007 bear market. During the 2020 bear market, TQQQ's decay amounted to a ...
Oct 20, 2021 · The primary argument against it seems to be that 1. It takes a ~30% drop in price to wipe out your entire investment. And 2. Something about the use of leverage and rebalancing of holdings creates decay, which in the long-run diminishes returns. On the contrary, many have stated that it is still a viable long-term holding due to the ever-bright ...
Jul 8, 2024 · Step 4: Divide your investment budget by the current share price of ProShares UltraPro QQQ. If your broker allows fractional share investing, the result is the number of shares you can buy. If it ...
- Matthew Frankel, CFP
TQQQ, a 3x leveraged ETF of QQQ (NASDAQ-100), provides great reward at great risk. Back tests show that TQQQ can be held longer term (1-Year) and beats QQQ but holding for too long (5 Years) can ...
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Jun 25, 2024 · QQQ experiences smaller price fluctuations and is considered to be less risky than TQQQ. Therefore, QQQ is best suited for long-term buy-and-hold investors, while TQQQ is better for active traders ...
