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One of the funds you list is leveraged 3x. If the market drops 33% you're wiped out, get liquidated, and can never recover. You've already made the assumption
by nly 4y ago
One of the funds you list is leveraged 3x. If the market drops 33% you're wiped out, get liquidated, and can never recover.
You've already made the assumption that you can detect the market bottom to select when to drop the $3K, which is ludicrous, and begs the question if you're know where the bottom is why not put the full $10K in then with maximum upward leverage.
- paulpauper 4y agothat would require a 33% decline in a single day for the Nasdaq, which has never happened in the history of the stock market.
- quickthrower2 4y agoI think your strategy is making the fallacy that past performance is a guarantee of future performance. Using specifically picked events (e.g. 33% decline) and then assuming that the event not happening in the past makes it impossible to happen in the future. Also how does TQQQ work. I don't know and I am happy to admit that. But I assume they need to do re-balancing shenanigans to keep the leverage at 3x, they have to pay interest on the leveraged money, and so on. So it is possible that the market takes a milder dip than 33% but you get stung on TQQQ - maybe not a wipeout but severely down and takes years to get back to break-even. Would like to hear from someone with knowledge of this. If you have a long term alpha strategy - one that can beat the market every time - and it is as simple as buying an off the shelf instrument and topping it up. I would be surprised.