> Your quant will also tell you, if your plan is to buy and hold a "3x long daily return" ETF, that it is the nature of such ETFs to go to zero, and they can say this much more confidently about the ETF than about bitcoin.
This is a common trope, and it is in fact demonstrably wrong. TQQQ is up 160X from 10 years ago. UPRO is up like 60X in the same time period.
Leveraged ETFs "go to zero" in the event the index they track bounces around a mean value or stays dead flat. In the event the index exhibits positive directionality, they do the opposite of going to zero, and instead outperform the sticker leverage.
Over its history the UPRO 3X leveraged S&P 500 ETF has actually tracked about 5X the index.
So their confidence is misplaced, and instead, as I mentioned demonstrates their tendency towards low-risk capital preservation strategies. If you believe in the positive directionality of the NASDAQ moving forward, I doubt there's a better risk-reward profile than TQQQ as it caps your loss on downside while simultaneously exposing you to a lot more than 3X the upside.
[edited for tone not reading as friendly as intended] This doesn't look like going to zero to me ;) [1] Could it? Sure. It's risky.
I'd love to see your fund's performance analysis replacing BTC with TQQQ!
I appreciate this comment. It looks like if TQQQ perfectly tracked 3x the daily return of QQQ defined as the opening-price-to-opening-price or closing-price-to-closing-price return, then it would be up about 64% or 75% on the year (neglecting a dividend), and in real life it's up 74%. Wow!
I don't think that people commonly buy TQQQ futures at annualized premiums of like 40% one day then sell them at annualized premiums of like 20% the next day, so it's harder for us to use TQQQ as the underlying.
This is a common trope, and it is in fact demonstrably wrong. TQQQ is up 160X from 10 years ago. UPRO is up like 60X in the same time period.
Leveraged ETFs "go to zero" in the event the index they track bounces around a mean value or stays dead flat. In the event the index exhibits positive directionality, they do the opposite of going to zero, and instead outperform the sticker leverage.
Over its history the UPRO 3X leveraged S&P 500 ETF has actually tracked about 5X the index.
So their confidence is misplaced, and instead, as I mentioned demonstrates their tendency towards low-risk capital preservation strategies. If you believe in the positive directionality of the NASDAQ moving forward, I doubt there's a better risk-reward profile than TQQQ as it caps your loss on downside while simultaneously exposing you to a lot more than 3X the upside.
[edited for tone not reading as friendly as intended] This doesn't look like going to zero to me ;) [1] Could it? Sure. It's risky.
I'd love to see your fund's performance analysis replacing BTC with TQQQ!
[1] https://finance.yahoo.com/chart/TQQQ