TQQQ an OK investment over the long run? For a 401k

S

SoyUnGanador

Any thoughts on holding this in the long run? In a 401k. I realize these leveraged ETFs are meant for short-term trading, because their price tends to "decay" (not the right technical term, I am sure) over time, but comparing it to the QQQs, it doesn't seem to decay all that much, and of course you get massive leverage. Any reason I should not put a significant part of my retirement portfolio into this? Call it 20% or 25% or something.
 
Yes, tqqq and spxl are my two choices. If you are confident that us market will do well as previous decades, these two are sure bets. I write calls against the underlyings.
 
You face the risk of ruin buying and holding 3x funds, or close to it. In the event of a massive drawdown, it can take decades for your investment to compound back to a prior high watermark.

But if you manage it right and go to cash during bear markets it can be a great vehicle.
 
The fact TQQQ is already in a ~75% DD from peak should tell you all you need to know about what it can do to your money. You have to treat it as a bet with 100% downside (position sizing via Kelly criterion et al). Of course, the attraction is a potential for asymmetric upside if you know when to exit.

If you want to stay clear of gambling, I would recommend looking into your assumption US stocks are going to do as well the nearest years as they've done the past decade. One of the worst sins of investing is to take historical performance in the last time window and apply it to the next time window.
 
SoyUnGanador said:
Any thoughts on holding this in the long run? In a 401k. I realize these leveraged ETFs are meant for short-term trading, because their price tends to "decay" (not the right technical term, I am sure) over time, but comparing it to the QQQs, it doesn't seem to decay all that much, and of course you get massive leverage. Any reason I should not put a significant part of my retirement portfolio into this? Call it 20% or 25% or something.
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Exactly right on not much decay\
but even the TQQQ founders do nor recommend that. WHY?? Bear markets slaughter that 3X as fast as QQQ\:caution:\:caution:\:caution:\ And they split it , was $190 area HI
So massive leverage = massivex3 loss. Better off in metals business or mine business like VALE sector. I have held TQQQ + TECL during uptrends > above 200day moving average.I did about 10% of account in TQQQ, in good uptrends above 200 dma.[100 TQQQ = $385,000 worth of QQQ......]
I dont mind holding some PSQ, in a bear trend; SQQQ+ TQQQ is for short term trading. Wisdom is profitable to direct.
 
Snuskpelle said:
The fact TQQQ is already in a ~75% DD from peak should tell you all you need to know about what it can do to your money. You have to treat it as a bet with 100% downside (position sizing via Kelly criterion et al). Of course, the attraction is a potential for asymmetric upside if you know when to exit.

If you want to stay clear of gambling, I would recommend looking into your assumption US stocks are going to do as well the nearest years as they've done the past decade. One of the worst sins of investing is to take historical performance in the last time window and apply it to the next time window.
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It shouldn't go to zero (ie a 33% one day market drop) bc of circuit breakers etc.

If you backtest there have been 99% drawdowns. It eventually went on to make all time highs (ie >100X return), but I can't imagine very many people managing to hold through a 99% drop lol.
 
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