Idk maybe you missed the part about not recommending systematically investing in those, especially this far into a bull market But yes in a severe economic downturn I wouldn’t personally hesitate to put a smaller percentage of my account in those(NOT all of it or the majority of it since some people need expanded explanations), for example a systematic investor could increase their contributions during a downturn and put the extra contribution amount in leveraged products. Of course not on a permanent basis, but yes for longer time(even years)to boost results.
Hypothetically it would take a one day move of 33% to wipe out TQQQ since it rebalances every day. Nasdaq corrected over 50%, I believe nearly 60% in the last economic downturn so under your theory QLD should have been wiped in 09. Go look at a chart it didn’t wipe in fact anyone that bought it in 07-08 and weathered that downturn(but Incase someone has something to say, yes I also realized QLD had a bigger drawdown) are still in better shape than those who bought QQQ in 07-08. AGAIN I REPEAT NOT A RECCOMENDATION TO INVEST 100% in a leveraged ETF. But yup it’s the fear driven, nailed home you can’t invest in leveraged products that prevented people from investing in those at all. There’s several leveraged mutual funds, ETFs that should have been wiped under your simplified theories too. I don’t see any reason why someone couldn’t boost returns with a little extra capital using leveraged markets.
Perhaps there are other strategies one could use leveraged ETFs for like creating deltas of 1 without having to use all their capital or even less than half of it. Of course you’d have to actually read the prospectus, and see how volatility(since volatility can effect leveraged correlation), rebalancing and other stuff would effect performance. If you’re able to understand that stuff and exploit the short falls then maybe you can use it to your advantage.
But then again I also speak from the position I’m in, not everyone else is in, based on my research, history l, etc. I notice the reoccurring theme on ET is it that everyone is a “know it all in all markets and time frames” and everyone that has different perspectives or different styles than those posting is a “dumb ass”. Perhaps in 10 years of watching the markets and learning about them, I’ve never found it fit to join a forum, until recently. I only joined to ask a question about a specific product. Specifically inquiring on daily time frame on the product, but of course those that trade on 250x shorter time frame and have no experience on the product all had something to say.
