Well then don't be stupid. If you want to maximize risk adjusted return you should not buy the same product 3 times over 5 times or 6 times or whatever those stupid ETFs promise you in leverage. If you want to max risk adjusted return you need to diversify. Why do you think hft houses trade hundreds or thousands of different stocks each day rather than putting all their money into one or two stocks? You will never get better risk adjusted returns by toying with those leveraged ETFs. All you do is pay through the roof for leverage.
What would a good ETF/fund be to balance TQQQ?
- Thread starter Saltynuts
- Start date
You waste too much time to fight his stupidity but the whole point is he didn't know what we are doing but refused to read everything we posted, even I asked him to do so.
Obviously he still thinks we have two instruments in portfolio and use one to offset risk of the other. But that's is not how our portfolio works. I wrote in my other post that we will sell GLD and inject it into TQQQ whenever TQQQ drop 90%, so we get TQQQ at 1/10 of its price, that is how TQQQ drop big but we can make more money on it.
He didn't know this, and did not want to know, saying whatever I wrote, I got to lose big. How stupid he is? You can't argue with someone who refuses to know you argument. You can't discuss with someone who makes conclusion on your argument before he even understand your argument. I write this post because I don't want to see him keep talking stupid here in this thread.
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That could VERY well be the case DiceAreCast, in other words, the cost of adding the leverage that allows you to invest less but still get much more upside will drag down your returns to such an extent that the upside on the things you invest in with that money you were able to set aside is always more than offset, leaving you worse off. I just don't know whether that is the case. Need to test just such a thing, hence this thread.
Still, answer a simple question. Let's say my investing time horizon is extremely long, call it 20+ years. If I had put $100 into QQQ as of 2/11/10 (the earliest the TQQQ goes back hence the earliest I could test), I would have $837.22 today. To have $837.22 today with an investment in TQQQ, I would only have to have invested $7.50. That is right, given the logarithmic growth of TQQQ, its that big a difference given the passage of time. So why not just invest 7.5% of ones portfolio in TQQQ today (call today 2/11/10 so the math is clear), and put the rest in a short term bond fund? If the TQQQ ever crumbles, you are only down 7.5% of the initial portfolio max, and then you can transfer cash out of your bond fund to more TQQQ and you just got in on the ground floor, pretty much an investment of a lifetime. You would almost certainly have gotten a better long term return than QQQ, given that (with the assumed 2/11/10 starting point), your $7.5 has grown to equal the same $837.22 value it would have equaled had you put $100 in QQQ. PLUS on top of that the you the interest on your short-term bond fund. PLUS your max and actual drawdown, at least on your initial investment, would have been FAR LESS than the drawdown if you had invested the $100 in QQQ (QQQ obviously falls more than 7.5% relatively often).
What is wrong with that analysis and concluding its better to stick like 7.5%, or 10%, or 15% or whatever of my portfolio in TQQQ, the rest in a short-term bond fund?
Thanks!
The answer is simple: sure if you had the balls to hang tight through 90% losses, knowing there were several severe crises and etf sponsors can go belly up any day or night or delist a product entirely with huge losses to investors, if you could withstand all that risk then kudos to you, your lottery ticket paid off. Are you willing to do that with a significant chunk of your entire net worth? Kids college savings? Then sure, go ahead.
Right, so again, how long have you worked in this industry and why backtest have you run to back up your fantastic trading idea? Dude, think about for a second what you are proposing. So you want to hold an instrument to lose 90% so you can buy it at 1/10 the cost? Thats the opposite of what my mentors taught me how to make money. Please carry on...
DiceAreCast
I have put you on ignore.
I have put you on ignore.
I hear you. I suppose one can never really evaluate the risk of ETF sponsor going belly up. As a side note - have ETF (or ETNs I suppose) sponsers ever gone belly up and their left investors without the money they were owed on their positions? I know they close funds all the time, but I thought to date everyone got paid up what they had on their positions.
But, keep this in mind - I'm not advocating putting 100% of your money in TQQQ (and to be clear, I'm not advocating you put anything in TQQQ, this is just an exploration thread, I'm trying to figure out whether *I* should put anything in TQQQ). What I'm saying is you don't have to risk your kids' college savings on it. I'm just saying consider putting [10]% of your cash in TQQQ. If TQQQ ever drops [90]%, throw another [10]% in there. Thank me in 20 or 30 years. Those numbers are in brackets because they are just general guidelines, much more testing to come on my part. But, absent the TQQQ sponsor going belly up, in 20 years you'll be thanking me with a return you couldn't touch on QQQ. Yes, you will have some big drawdowns on your *TQQQ* investment, but NEVER on your initial overall account balance (assuming the rest of your investment is in cash, short terms bonds, or something else not closely correlated with TQQQ/QQQ, hence part of the reason for this thread). Or at least I think based on my current testing. Invest the remainder of your portfolio in SPY, the DIA, some short-term bond fund or something else you consider belly-up proof to protect the great bulk of your investment for you and your kids.
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https://www.google.com/amp/s/www.si...re-closing-causing-huge-losses-for-investors/
I hear you. I suppose one can never really evaluate the risk of ETF sponsor going belly up. As a side note - have ETF (or ETNs I suppose) sponsers ever gone belly up and their left investors without the money they were owed on their positions? I know they close funds all the time, but I thought to date everyone got paid up what they had on their positions.
But, keep this in mind - I'm not advocating putting 100% of your money in TQQQ (and to be clear, I'm not advocating you put anything in TQQQ, this is just an exploration thread, I'm trying to figure out whether *I* should put anything in TQQQ). What I'm saying is you don't have to risk your kids' college savings on it. I'm just saying consider putting [10]% of your cash in TQQQ. If TQQQ ever drops [90]%, throw another [10]% in there. Thank me in 20 or 30 years. Those numbers are in brackets because they are just general guidelines, much more testing to come on my part. But, absent the TQQQ sponsor going belly up, in 20 years you'll be thanking me with a return you couldn't touch on QQQ. Yes, you will have some big drawdowns on your *TQQQ* investment, but NEVER on your initial overall account balance (assuming the rest of your investment is in cash, short terms bonds, or something else not closely correlated with TQQQ/QQQ, hence part of the reason for this thread). Or at least I think based on my current testing. Invest the remainder of your portfolio in SPY, the DIA, some short-term bond fund or something else you consider belly-up proof to protect the great bulk of your investment for you and your kids.
Thanks DIC. Those were things that can go wrong, but has an ETF/ETN provider ever gone belly up and investors in its products actually not been returned their investment? I mean, for example, an ETF closes at 12.37. The ETF provider might stop supporting the product and what not, but I still think I get 12.37 per share I own. Has there been a situation where I didn't get that 12.37 because ETF/ETN provider was belly up?
Thanks.
Thanks.
pricing supplement for the VelocitySahres 3X Long Crude Oil ETN (UWT):
“If the Intraday Indicative Value of any series of ETNs at any time during NYSE Arca trading hours and at or prior to the Settlement Time on any scheduled Index Business Day is less than 25% of the Closing Indicative Value of such ETNs on the immediately preceding Index Business Day (meaning that the Intraday Indicative Value has declined by more than 75% from the prior day’s Closing Indicative Value) (such event, a “Trigger Event”), such series of ETNs will be automatically accelerated (an “Automatic Acceleration”) and the holders of such ETNs will receive a cash payment per ETN equal to the Automatic Acceleration Redemption Amount on the Automatic Acceleration Date.”
https://www.google.com/amp/s/www.fo...-wake-of-negative-trading-in-oil-futures/amp/
“If the Intraday Indicative Value of any series of ETNs at any time during NYSE Arca trading hours and at or prior to the Settlement Time on any scheduled Index Business Day is less than 25% of the Closing Indicative Value of such ETNs on the immediately preceding Index Business Day (meaning that the Intraday Indicative Value has declined by more than 75% from the prior day’s Closing Indicative Value) (such event, a “Trigger Event”), such series of ETNs will be automatically accelerated (an “Automatic Acceleration”) and the holders of such ETNs will receive a cash payment per ETN equal to the Automatic Acceleration Redemption Amount on the Automatic Acceleration Date.”
https://www.google.com/amp/s/www.fo...-wake-of-negative-trading-in-oil-futures/amp/