Why shouldn’t I buy leveraged S&P 500 ETFs as part of a buy-and-hold strategy if I’m in my 20s, don’t have immediate need for the cash I’m investing, and believe that stock picking / active management are basically bullshit, but like the idea of taking on more risk?

Are there better ways to expose myself to higher risk while still tracking the broader economy? Don’t say crypto. I hate crypto.

Fully serious question.

likehelpful
Posting as :
works at
You are currently posting as works at
Highlighted IconHIGHLIGHTED

Leaveraged ETFs reset every day. I did read some analysis a while back that showed how this means a buy and hold strategy for leaveraged ETFs fails to match regular ETF returns.

Essentially an annual 10% Rate of return for sp500 does not imply a 100% rate of return of 10x ETF.

like

There is a lot of incorrect information here…
You don’t even have to do any fancy math. There’s truth in that leveraged funds have some degree of decay.
But just looking at 5Y return my NASDAQ is at about 190% and my TQQQ is at ~1,300% return…

So yes a leveraged ETF will give you better returns unless the market is flat or down. So in long term leveraged ETFs win

Perhaps what A1 said my brother truer. Getting leverage on a normal ETF may be better than buying a leveraged ETF (provided you have enough capital to cover any margin call you get)

like

Hello fellow 3x’er

Post Photo
like
Recent IconRecent

Levered etfs are often not intended to be held over night such as SPXL

You’d probably be better slapping on some real leverage aka a loan

like

More like a deep OTM weekly on SPY purchased Thu afternoon at 3:59pm ET…

In reality, options on a 3x leveraged ETF are no different than an option on a regular ETF.

like

Because when the market falls 10% or 20% or more and you lose a multiple of that you're gonna sell in a panic.

Maybe live thru one bear market first.

like

Leveraged etfs don’t work the same as leverage and aren’t generally ideal for long-term holding. You’re probably better off taking on margin.

More generally, efficient market hypothesis misleads people. Taking on higher risk (e.g. through leverage) increases expected (ie average) returns, but also increases probability of losing it all. No free lunches

like

Research has found that a portfolio with leveraged stock index holdings and bond index holdings provides the best risk adjusted return. Something like a 1.5x 60/40 allocation. Differences are very small though and it’s probably splitting academic hairs relative to the classic 90/10 or 95/5 allocation for an early 20s long term investor

like

You can also buy ITM, long-timeframe, LEAPs in addition to using margin to increase leverage but are risking loss if the market doesn’t go up over that timeframe

like

This 100%

TQQQ and UPRO. The people telling you about volatility decay can enjoy their BND returns while you lap their portfolio. Go get that money.

like

Fuck yeah #levertfup

like

I was just thinking about potentially doing this. TQQQ is up 105% over 1 yr and 1422% over 5 years. So why would leveraged indexes not beat regular indexes in the long run? Genuine question - I know I likely am missing something.

Of course if market drops 5% in one day, TQQQ could drop 15%. So obviously much more volatile. But if I hold for 5-10+ years, the market will most likely be positive then. So wouldn’t my returns essentially triple over that long time horizon? I wouldn’t drop whole portfolio in it, but thinking about adding some.

Anyone know what I’m overlooking?

like

P1, exactly look at the past month.
VOO is down .09% and UPRO is down 0.95% (10x)

like

No, don't do it. Look up volatility decay.

Tldr, your losses will wipe out your gains.

like

NTSX is a replacement for a total stock market index fund that outperforms on a risk adjusted basis

like

You could invest in small cap or even micro cap indexes.

Why not? Given the mention of leverage, seems like risk isn't your main concern....

like

Crypto

No

like

DECAY

Do I sleep easier not having my life savings in leveraged index funds? Yes.

Do I love when $30k acts like $90k and SOXL/SPXL are printing me money? Also yes.

Set up stop losses. Lost a bit playing leveraged oil & gas etf, i was doing good but omicron variant wiped me out all gains.

Related Posts

Thoughts on the future of Cyber Threat Intelligence as a specialization? Is it a discipline that will continue to grow?

like

I love to hate the Cowboys

likeuplifting

Do you think using “him/her” for “he/she” (ex: “her is playing” “him not here yet”) is something that kids usually grow out of? Or does it need direct intervention? I have 2 students who exhibit this error, who otherwise should be dismissed. Normally I’d just keep them on and work on it alongside other goals, but they don’t have any other goals, and with COVID, and my upcoming maternity leave in March, a more compact caseload would be advantageous.

Hi Everyone , I have offer from both Amdocs and KPMG . Amdocs is offering me better pay than KPMG But in Amdocs the project is of Development + Support (linx , sql and azure databricks ) and in Kpmg purely Azure based development .
Which one should i join ?

like
like

People walking around who I can heavily smell their moldy laundry is a sign to me they have no idea how to manage life.

like

What will happen to EY Parthenon team after split?

like

Hi Fishes,

Can we claim for electricity bill, chair table and internet expenses in Capgemini?

like

Does anyone have two different statuses right now? I’m Platinum Premier in Marriott but only Platinum Elite in SPG.

Do MBB sponsor for 2+2 MBAs such as HBS? (Straight out of undergrad, 2 years work, MBA)

like
like

Hi Microsoft Fishes are these numbers accurate ??

L58-L59 : Level 1 : 14-16 Lakh + 10-15k worth Stocks
L59-L60 : Level 2 : 16-18 Lakh + 10-15k worth Stocks
L61-L62 : Senior Level 1 : 18-20 Lakh + 10-20k worth Stocks 
L62-L63 : Senior Level 2 : 20-25 Lakh + 10-20k worth Stocks

like

KPMG I cleared all the rounds of my interview with KPMG and was asked to provide necessary documents and fill a CAF form a week back and had a HR discussion too. I have requested for about 3Lakhs additional fixed pay since my current CTC has increased and HR said she will get back on this. It's been a week and haven't heard back on the offer letter. How long do you think I should wait. Please wait.

like

I’m not a big drinker/party-goer. Okay with social events but also need me time. Will I feel super excluded at bschool?

like

Anyone know of any all non-white medium-to-large sized law firms in Colorado?

like

is it allowed to bring in outsiders e.g. parents, friends to the office for a visit as allowed in companies like CISCO, VMWARE, ETC. ETC.

like

What skills would you say are transferable from public accounting to management consulting, specifically change management?

like

When are Accenture RSUs from FY21 bonus supposed to be deposited and appear in MyHoldings?

like

Hi Fishes,

I am a Chartered Accountant and CPA US with 2 years of experience. I am planning to move to Canada by September 2022. But I am confused whether it will be a good decision to move to Canada.
I have a job offer in India with 17 lakh CTC.

like

I recently joined citi. I have been given choice for to select superannuation as 13% of BS or 12500/- monthly or zero.

This is one time selection and not reversible.

I am already investing 1.5 lakh in 80C through SIP and EPF.

I need more detail about superannuation and is it beneficial or not?

Also is there any retirement age in IT field 🤔 (or in citi)?

Additional Posts in Consulting

Is the American dream dead?

I’ve put multiple offers on homes all decently above ask price with all but one contingency waived but every single house has been swiped by all cash offers. What the fuck

like

Heading to Austin next month for a long weekend with SO. Any restaurant and/or activity recommendations?

like

How do you judge when to leave a company for something better if you never burn out or hate where you are?
My specific situation: 4 years out of undergrad with Slalom, I like my job/coworkers and am making solid money but am starting to be qualified for interesting/lucrative exit ops. Not trying to grass-is-always-greener myself out of a good thing and I'm in no rush to leave, but how do I know when it's time to take advantage of other opportunities? Would love any advice from older folks!

like

What's with all the BCG layoffs? My buddy was just let go....

like

Any book recommendations that have changed your life / your view on life or lifestyle?

like

Which Marriott property has the best bed? (E.g., Westin Heavenly) thinking of using my 40% off code.

like

Any Deloitte members have insights on any internal Supply Chain Consulting positions for someone with 1YOE.

like

Met 2 of our new hires last night at a training. They've been here 3 days and are already concerned about being laid off. Felt bad for their anxiety but think it's ill-placed to some extent

like

Hey fishies! Super curious...What do you redeem for your recognition awards?

like

Are any top consulting firms hiring for experienced analysts currently? I know ACN and some others are cyclical for resources 2-3 years out of college, but I’m looking to make a move sooner than fall

like

Supply chain Folks. I have a friend who is looking to get back to work after maternity hiatus of a few years. She was a buyer. She wants to pursue CSCP. Will it help her chances of landing a job? Tks!

like

Those who have undergone layoffs... Our fallen sisters and brothers... What are the plans now? Would be especially interested in hearing from those not planning to go to another consulting firm.

like

genuinely haven’t accomplished a single task today & can’t focus

likeupliftinghelpful

Best consulting idioms. Go

like

Top consulting superpower: Simultaneously maintaining a Miss America smile and a consistent, undying hatred of the human race

like

Worried about my parents’ retirement. Is it possible for me to open up a Roth IRA on behalf of my mom? My dad has a IRA & my mom is relying on her state jobs’ retirement plan.

like

Can I update my LinkedIn to “Almost Partner” now that I’m an SM?

funnylikeupliftingsmart

What are your AirPod loss stories?

like

How hard is it to do taxes? Never done them before (only 22 y/o) but I now have like 10 w-2 forms and I’m wondering if it’s a bit beyond me to do it myself

like

Anyone in HCOL areas using their home as their retirement? For example, not contributing to retirement to save for large down payment on $1.5M+ house? Or just doing 20%?

helpfullike

New to Fishbowl?

Download the Fishbowl app to
unlock all discussions on Fishbowl.
That was just a preview…
Sign Up to see all discussions
  • Discover what it’s like to work at companies from real professionals
  • Get candid advice from people in your field in a safe space
  • Chat and network with other professionals in your field
Sign up in seconds to unlock all discussions on Fishbowl.

Already a user?
Login here

Share

Embed this post

Copy and paste embed code on your site

Preview

Download the
Fishbowl app

See what’s happening in your industry
from the palm of your hand.

A phone with Fishbowl app

Send download link to your phone

OR

Scan your QR code to download
Fishbowl app on your mobile

By continuing you agree to Terms of Use and Privacy Policy.

Messaging rates may apply

Download app

Sign up for free to view this conversation on Fishbowl

By continuing you agree to Terms of Use and Privacy Policy

Already have an account? Log in

Sign up for free to continue using Fishbowl

By continuing you agree to Terms of Use(New) and Privacy Policy(New)
Messaging rates may apply

Already have an account? Log in

For account settings, visit Fishbowl on Desktop Browser or

General

Legal