Just watch out for the volatility drag on leveraged ETFs, as that can tank returns if you buy at the wrong time. In consistently upward markets, the returns can be phenomenal. But in choppy ones, they tend to underperform because they're targeting 3x performance on any given day, and not longer periods.
So for instance, if the S&P drops 3% in a day and then goes up 3.1% the next day, it's flat. But with a 3x leveraged fund tracking daily movements, that ETF would be a 9% drop and a 9.3% increase, which results in a -0.54% return.
Over the long term in the right conditions, that can eat away at returns. You can see that effect over the last 3.5 years or so, where the S&P is up about 34% over its pre-COVID high. You'd expect a 3x fund to basically be up 100% in the time period, but UPRO and SPXL (both 3x S&P 500 ETFs) are only up about 22% because of how choppy the markets have been. That's one of the reasons people might try to get leverage in a different way.
Of course, the reverse is true when the markets are on fire, and the returns will tend to be better than 3x the underlying index, so if you buy at the right time the returns can be insane. $50K invested into TQQQ at the end of 2011 would have been worth nearly $6M 10 years later.
Exactly, I am not sure if I am quite there yet to implement. I still think we are in for a choppy end to 23. It is a really interesting mix of economic and company results right now. The one thing I haven't decided is if it needs some more active management on the exits and re-entries or just let it run.
Exactly, I am not sure if I am quite there yet to implement. I still think we are in for a choppy end to 23. It is a really interesting mix of economic and company results right now. The one thing I haven't decided is if it needs some more active management on the exits and re-entries or just let it run.
Wait, this the leveraged ETF you’re talking about just setting and forgetting? Particularly if things are volatile, that’s not a great idea. For those to work you generally need a stable trend because it’s the volatility that kills them.
If you bought any of these 10 years ago congrats. I first bought AMD in 2002 (!) back then I was convinced Opteron was the next thing.
I bought a small amount of NVDA a little more than 10 years ago, when I got my first job. Boy, has that worked out for me! I'm pretty excited about it this week so I want to tell someone but it feels gauche to tell me real-life friends. Allow me to boast to you internet strangers!
EDIT: It was luck, not skill. Feels great to get once-in-a-lifetime lucky!
Last edited by wireframe; 06-04-2023 at 04:40 PM.
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Wait, this the leveraged ETF you’re talking about just setting and forgetting? Particularly if things are volatile, that’s not a great idea. For those to work you generally need a stable trend because it’s the volatility that kills them.
Not a set and forget per se. At least a quarterly rebalance. I also agree now isn’t necessarily the right time to start it.
Although the rebound from December is mind boggling to me. Spy finally hits a bull market. Tech on a tear. TSLA and NVDA seem crazy lol. This is also a portion of my investments that if lost wouldn’t kill me. I’m mainly in boring boglehead type stuff. I just have an aversion to stock picking on a long time frame. Although hitting the next NVDA/AAPL would be nice.
It might also need some more active management rules around exiting when vol is high or using a stop loss on UPRO and buying backing in in after SPY rebounds.
With Trudeau's divorce, any thoughts to what it may mean if there's a new leader put in for the Liberals or if the Conservatives come to power in the next election? Do particular sectors go up in each of those scenarios?
Lol. I honestly think there are a bunch of downstream implications from that.
There is very little - if you want upside or downside on political changes look at LATAM. Canada is too stable to profit off of one leader change even if that were to happen.
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Today with the tank in the market I bought some BNS on the us exchange. It’s pretty attractive right now to see the yields available. Enbridge is 8.3%. I bought in at $51 but this is getting more attractive to buy in further.
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With Trudeau's divorce, any thoughts to what it may mean if there's a new leader put in for the Liberals or if the Conservatives come to power in the next election? Do particular sectors go up in each of those scenarios?
The media has been exceptionally devoid, so it would seem, of any further mention of Mr. PhotoMe and his ex-wife. I woulda expected some tabloid type stuff at best, and at minimum some pontification. Or is the media in general afraid of him?
I honestly feel bad for those people. Anyone asking "why aren't my shares in this bankrupt company worth anything" absolutely shouldn't be investing real money.
It's crazy the group-think in WSB. Call premiums for BBBY options, even way out of the money ones, were very high right up until they filed. I made some very easy money there, but feel like the people paying high prices for those securities were sold a bill of goods by an internet community.
I honestly feel bad for those people. Anyone asking "why aren't my shares in this bankrupt company worth anything" absolutely shouldn't be investing real money.
It's crazy the group-think in WSB. Call premiums for BBBY options, even way out of the money ones, were very high right up until they filed. I made some very easy money there, but feel like the people paying high prices for those securities were sold a bill of goods by an internet community.
Maybe I'm a terrible person, but I have very little sympathy for this. This strikes me as a symptom of the death of expertise. While it feels good to say that apps like Robinhood are "democratizing" investing, that's not what's actually happening at all. Instead, people are straight up gambling, and while its under the guise of investing, it's going to have the same impact.
