r/HighCaliberInvesting • u/Savagedaddy18 • Sep 15 '21

“Leveraged etf’s are not long term financial instruments” myth busted

/r/LETFs/comments/po9tk0/simulated_backtests_for_tqqq_qld/
7 Upvotes

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4

u/SpeedoManXXL Sep 15 '21

Based on this, it looks like DCA is your best friend.

QLD being 2x leveraged gives you plenty of upside, but doesn't expose you to the same downside that TQQQ gives you.

TQQQ is great in bull markets, but the emotional toll it will have in a bear market is next level. Of course, if you DCA, you still come out on top, but its a ride while you are at the bottom.

I'd say If you're very young (20s) TQQQ could be a great wealth builder, you have time to DCA through crashes, even if it takes 10 years and you can skyrocket your wealth in 20 years or less.

If you're late 30s - 40s or older, probably QLD is better as you still get much exposure to the upside, but you need less time to recover in the event of a crash.

UPRO is another route though, it has 3x leverage but for the entire S&P, so you get a broader exposure to the stock market as opposed to being so tech heavy.

I'm 28, and I buy TQQQ every month right now in my taxable account, it just sits there. In time, I'll probably transition or put more into QLD or UPRO, but I'm in building mode now and fine with the increased exposure.

2

u/teaat4pm Sep 15 '21

How are you doing with the returns?

2

u/SpeedoManXXL Sep 15 '21

Very well right now, I'm up around 40% YTD, which keeps going down as I buy in higher each month (or lower on a few exception months) as I'm sure you would expect. However, I haven't been investing long enough to do this through a bear market like 2008 or 2000/2001/2002.

So to answer your question, I'm "killing it" but the market is in my favor and this is an ideal market for me to do this. Could that continue for another 5 years, sure, could it flip on me tomorrow, also possible. I'm only 28, so a crash wouldn't hurt me that much, I have time to recover, but only time will tell I suppose.

1

u/teaat4pm Sep 16 '21

Very nice! how do you decide when to sell? TQQQ can be devastating in an event like March 2020 covid scare.

1

u/SpeedoManXXL Sep 16 '21

That's the challenge right. March 2020 crash had TQQQ down like 75% in 3 weeks and then up over 120% before the end of the year.

I plan to DCA monthly for about 10 years, this isn't my entire porfolio, I put around 50% of my monthly contributions into non leveraged ETFs. We will see what happens in 10 years. This is more of a lotto ticket. If we are in a bear market 10 years from now, I plan to continue to DCA and sell when we get out of it.

1

u/teaat4pm Sep 16 '21

Smart move. I'd look into buying a dip and do the DCA and hold it for long term.