TQQQ...

[Scataphagos]

P.P.S. why doesn't the massive 3x leverage this thing brings to bear drag down its returns more, anyone know? Its like too good to be true!!!

It's actually about right.

In a bullish market, you get "3x the performance minus the cost of the leverage". Therefore, the actual performance is a bit less than 3x the QQQ simply due to expenses.

In a bear market... you get 3x the performance on the downside PLUS the cost of leverage.... so it will be down more than 3x the loss.

Since the beginning of TQQQ, it's had the "wind at its back" with Fed money-pumping and all. Ideal vehicle for that environment.. and knocks the idea that "leveraged funds are for day/short term plays only... not longer term investing".

 

[Saltynuts]

It's actually about right.

In a bullish market, you get "3x the performance minus the cost of the leverage". Therefore, the actual performance is a bit less than 3x the QQQ simply due to expenses.

In a bear market... you get 3x the performance on the downside PLUS the cost of leverage.... so it will be down more than 3x the loss.

Since the beginning of TQQQ, it's had the "wind at its back" with Fed money-pumping and all. Ideal vehicle for that environment.. and knocks the idea that "leveraged funds are for day/short term plays only... not longer term investing".

View attachment 259377

I think what you are saying is on an up day rather than do 300% of QQQ it might be up 295% of the QQQ, and on a down day be down 305% of the QQQ rather than 300%, due to the expenses and carry costs (or whatever those costs that drag down the performance of these leveraged funds is). All that makes sense.

But, the more I think about it, my numbers have to be off. Even if TQQQ does a perfect 300%, then wouldn't you need to start with an investment of $33.33 to equal the long-term performance of the QQQ? My numbers have the initial investment of less than $10, and it still catches up in the long run to $100 in the QQQ. Not sure how that can be right, will check my numbers tonight.

Thanks Scat!

 

[Scataphagos]

I think what you are saying is on an up day rather than do 300% of QQQ it might be up 295% of the QQQ, and on a down day be down 305% of the QQQ rather than 300%, due to the expenses and carry costs (or whatever those costs that drag down the performance of these leveraged funds is). All that makes sense.

But, the more I think about it, my numbers have to be off. Even if TQQQ does a perfect 300%, then wouldn't you need to start with an investment of $33.33 to equal the long-term performance of the QQQ? My numbers have the initial investment of less than $10, and it still catches up in the long run to $100 in the QQQ. Not sure how that can be right, will check my numbers tonight.

Thanks Scat!

I took some numbers off the chart for 11 years from 02/09/2010

QQQ = 21.6% compounded annually (don't know about the impact of dividends, if any, in either case)

TQQQ = 56.3% compounded annually,

So... 3x, 21.6% = 64.8%, but TQQQ was "only" 56.3%.

The difference being primarily the cost of leverage as an expense.

This was also the greatest bull market in history with Fed money pumping like never before and the time when cult favorite Tesla ran up to something like an absurd P/E of 1600x. I wouldn't be extrapolating anything along those lines into the future.

 

[Saltynuts]

I took some numbers off the chart for 11 years from 02/09/2010

QQQ = 21.6% compounded annually (don't know about the impact of dividends, if any, in either case)

TQQQ = 56.3% compounded annually,

So... 3x, 21.6% = 64.8%, but TQQQ was "only" 56.3%.

The difference being primarily the cost of leverage as an expense.

Yep yep, your 64.8% and 56.3% numbers are real similar to stuff I was looking at when I was working on the spreadsheet.

So do you agree, where I said my numbers showed at $7.71 investment in TQQQ at its inception would grow to an amount today which would equal the amount a $100 investment in QQQ at such time would grow to today, sounds very much off? Intuitively I don't see how it could catch up if its return was 300% (or less), seems you'd need to start with at least $33.33. My calculations must be off.

 

[easymon1]

So... 3x, 21.6% = 64.8%, but TQQQ was "only" 56.3%.

The operations behind generating these 3x results in detail?

 

[Scataphagos]

Instead of $7.71, I get $6.32 as a starting value for TQQQ (11 years)

 

[murray t turtle]

On another thread I showed ETers some alpha on going QQQ over SPY. Someone mentioned TQQQ is superior. I was skeptical. I know these leveraged ETFs have carry costs and what not that tend to drag down returns.

But then I thought, what the hey, let's test that mofo.

So I took the data for it and QQQ starting with TQQQs inception on 2/11/2010.

If one had put $100 in QQQ on 2/11/2010, today that would be worth $824.96. That is legit as FUK, no doubt.

But what if one had put $100 in TQQQ on 2/11/2010? That $100 would be worth... wait for it... wait for it... $10,704.08 today!!!!!!! More than TEN FREAKING TIMES as much!!! That's in like 11 freaking years!!!

Sure, the drawdowns were bigger in TQQQ, max drawdown being a bit under 30% in QQQ but almost 70% in TQQQ. Sure, you probably would have offed yourself a few times over if you had put your life savings in TQQQ. But let's look at it from another, even more telling angle.

If you had put only $7.707 in TQQQ on 2/11/10, guess what that would have grown to today? $824.96. That's the same amount you would have ended up with if you put $100 in QQQ (see above). That is over $92 you could have ALSO invested any anything you wanted!!! Gold, bonds, whatever!

Now, THAT, my friends, is ALPHA. Enjoy!


Saltynuts... bringing ETers alpha since 5/19/21.

P.S. please sign in here you who pointed out TQQQ in the other thread, you deserve some credit as well! This Bud's for YOU!!!!

P.P.S. why doesn't the massive 3x leverage this thing brings to bear drag down its returns more, anyone know? Its like too good to be true!!!

%%
NOT to good to be true;
some times QQQ outperforms + QLD outperforms/depending.........................................................................................
Actually since QQQ drewdown from $120 to less than $20 its more than 70% [more than 84.8%
+/]for QQQ.
TQQQ inception 2010\ so i used discretion in QQQ, going back to 1999 + 2000 -2002 bear.

 

[Scataphagos]

The operations behind generating these 3x results in detail?

Are you asking how I came up with those numbers or how the fund managers achieved that performance?

 

[easymon1]

how the fund managers achieved that performance?

...in detail.

 

[Saltynuts]

Instead of $7.71, I get $6.32 as a starting value for TQQQ (11 years)

Interesting. But, logically, does that make sense to you? How can a starting investment of anything less than 33.33% possibly catch up to a starting investment of $100 in QQQ given the max average 3x performance delta? Just seems completely counter-intuitive to me. I must be thinking about it wrong.