LOL, care to show me the quote of TQQQ at the "tech bubble peak", and how its 270% off that price? Come on man, no one should be that wrong. Ever. You are better than that. Prove it to me, but more importantly, prove it to YOURSELF.
I simulated the price of TQQQ starting from 1999. To the veterans here, what was the tech bubble like? It looks so "obvious" in hindsight, but it's always different in the trenches. Did most of you get out in time?
So you "simulated" it. Let me get this straight. QQQ is up like 300% since its tech bubble peak (like 327 or something today versus 102 at tech bubble peak or something like that). Don't bust my balls on the numbers, but something like that. And, even though TQQQ is supposed to do 3x what QQQ does, and since its existence has thoroughly trounced QQQ in an overall bull market, you are going to tell me that it got slaughtered against QQQ via your "simulations" if you go back further, even though NASDAQ and QQQ is up 300% over that very period your simulation was supposed to run back against? Let's just say I'm... skeptical. Do share what all went into your "simulation", though. I'm all ears. Very interesting! Thanks!
Yes, the simulation is accurate. The reason TQQQ is so low is because of the daily compounding of 3x returns. During the tech bubble burst, the NASDAQ fell by almost 80% in a year in and a half. Let's consider that roughly 400 trading days. That means the average decline was about 0.004% per day. TQQQ would decline by about 0.012% per day. (1-0.012)^ 400 = 0.0079 So in this scenario, TQQQ would have fallen to less than 1% of its previous value. The reality was even worse because of volatility during the collapse.
Well damn man, I'm going to have to do some testing. You are hitting at the heart of the matter, or at least it appears you are. Will follow up, likely tomorrow. Thanks and have a great night!!!
There is one mothed that you can profit big from a big bear market. Hold 50% of your money in TQQQ, another 50% in a gold ETF, like GLD. The rule is whenever TQQQ drop 90%, put 70% of your GLD into TQQQ. If you get a year 2000 type bear market, TQQQ drop more than 99%,you got two injections and you would make 1000 times profit during last 21 year. I use GLD because gold goes up in bear market.
Yo manic. So I did some testing and "simulation" myself. I first compared TQQQ to QQQ for each day TQQQ has been in existence (beginning February 2010). If QQQ has an up day, TQQQ on average goes up 293.72% as much. If QQQ has a down day, TQQQ on average goes down 300.99% as much. If QQQ is absolutely flat, TQQQ on average gains .012% (funny, one would think it would be down, but there were only like 14 days total so probably just a fluke in data, but not particularly relevant given the few days). I then went and backed into what TQQQ prices would have been using the actual QQQ daily returns for pre-TQQQ periods and applying those same percentages/numbers as above. I came up with a calculated high for TQQQ on 3/27/2000 of 3.369108. Then a complete tailspin - that high was not eclipsed until 8/1/2013, when (actual) TQQQ hit 3.41561. Of course, TQQQ is in the 90s today. There is no doubt that my simulation above is not perfect. In fact, the TQQQ price went negative few times, showing in essence total loss. But, isn't that a more indicative calculation than yours, where you just assumed (it seems like) 400 straight down days, instead of looking back at what QQQ actually did and figuring out what TQQQ might have actually done based on the computed averages, on an actual day-by-day basis? Thanks! EDIT - I guess the TQQQ prices going below in my "simulation" probably signify that TQQQ would have gone to essentially zero, so maybe it would be correct to say TQQQ price today hasn't even eclipsed the 2000 highs. I just don't know. But I do know one cannot put too much of your portfolio in TQQQ.
50% seems a LOT to put in TQQQ. You will almost certainly get a 99%+ loss in TQQQ eventually, and losing about half your portfolio would probably be devastating for most anyone. But I like your overall strategy. You want enough in TQQQ over the long haul to take advantage of its logarithmic long-term growth, but not such much that when it incurs a 99%+ loss you are killed, and of course you want to have assets on the side you can use to buy into TQQQ when it has those huge drawdowns. Who knows what the "best" percentages are. More testing is in order.