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".
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.
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.
%% 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.
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.