This means whatever the gains or losses are for one day become the new set point for the next, which can become a steep uphill climb for buy-and-hold investors. That said, keep in mind that during the vast majority of that time period, the U. This superior performance was also associated with substantial lows during this time period. In addition to its higher risk profile, TQQQ also charges a much heftier expense ratio of 0. All of that said, for the vast majority of investors, QQQ is the right choice.
If you plan to put money into TQQQ, you should fully understand leverage and derivatives and be prepared for the possibility of major loss of principal. This means if those companies fall on hard times, so too might your investing dollars. David Lavie is a writer and editor with two decades' experience in marketing communications, equity research and publishing. He is a founding partner in Quartet Communications, where, as Head of Creative Content, he helps financial clients set their work apart by focusing on brand, audience and voice.
With two decades of business and finance journalism experience, Ben has covered breaking market news, written on equity markets for Investopedia, and edited personal finance content for Bankrate and LendingTree.
Select Region. United States. TQQQ includes three times leverage on the top companies listed on the Nasdaq. This article is for informational purposes only. It is not intended to be investment advice. Money Investing Credit Banking. Share this article. Sean is a student of the financial and technology industry. He is interested in the people and companies who are driving the innovation that will change our future. Table of Contents. What Is QQQ? Pros and Cons of QQQ.
By Kent Thune. Kent Thune has spent more than two decades in the financial services industry and owns Atlantic Capital Investments, an investment advisory firm, in Hilton Head Island, South Carolina. Learn about our editorial policies. Reviewed by Gordon Scott. Learn about our Financial Review Board. Article Sources. Your Privacy Rights. To change or withdraw your consent choices for TheBalance. Again, this is doing some hand waving with the napkin math and is also ignoring the fact that the LETF maintains your constant leverage ratio while margin does not unless you borrow again every time the portfolio rises in value.
Another consideration is obviously what you want to buy. But what happens if I use M1 and deposit biweekly and M1 performs dynamic rebalancing? Would just help keep things in balance, which is a good thing.
See my post on the All Weather Portfolio where I compared rebalance interval at the end. Differences are minimal. What were the differences between weekly, monthly, quarterly, and yearly distributions? Would you recommend this strategy with FNGU? Is there a way to further increase profits by selling options on the underlying assets? Thank you so much for this post. You are a star. Rebalancing bands may be sensible. Not sure what you mean about different distributions. If you mean covered calls, probably not.
Thank you. I should have rebalancing not distributions. I had another crazy idea… I may be way out in India here. What about the VIX as a hedge? This was discussed in the Hedgefundie thread on the Bogleheads forum. Monthly is probably too often in that you could be catching a falling knife. So quarterly is a happy medium. This was both the conclusion in the Hedgefundie thread on the Bogleheads forum as well as my empirical findings when I backtested my leveraged All Weather Portfolio.
What is your opinion on using stochastics vs. I am still undecided about using bands vs quarterly rebalancing. Thank you guys. Is there a previous post that walks through how to do that in PV? Hey Bill. Anyone who is interested in leveraged investing needs to read any of the several books written by Ralph Vince. He is THE guru on the subject of leveraged investing. I read his first book when it came out in and it had a big influence on me. The takeaway is that more leverage is not necessarily better.
Too much leverage is actually counterproductive. I found that 3x leverage works great in a bull market but suffers when a bear market is encountered. The sweet spot in my testing was 2.
My cousin has been dabbling in the market and I put him in QLD as a long-term set-and-forget investment. Yeah, whatever, dude.
I recently came across your page after a famous podcaster recommended it. I have learn a lot from all your articles. I love the way you explain your points in layman words.
I had a few questions about M1 Finance. Just thinking in term of taxes? Apart from this pie and the Ginger Ale pie, do you own any other pies? Thank you in advance for providing all this knowledge to us. My total portfolio is spread across several accounts with different brokers, so the Ginger Ale for example is not an actual pie I own. Again, as I can see from you calculations from PortfolioVisualizer, the end result has indeed changed.
Also the GAGR is much better in your calculations based on deposits PS: I am not saying in any way that you are wrong.
Many thanks for your answers. Looking forward to continue reading more of your articles. Your email address will not be published. Save my name, email, and website in this browser for the next time I comment.
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