A Little Risk For a Lot More Money
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Financial experts warn us not to hold leveraged products like TQQQ over the long haul.
And they're right this time.
Because during the Dot Com Meltdown, something like TQQQ would have almost certainly gone to zero. And during 2008, it probably would've lost about 90%.
Granted, TQQQ wasn't trading back then, but a little math shows that it was probably a goner in those crashes.
So is there a way to use TQQQ to boost a long-term/retirement account?
Let's take a look.
As a benchmark, we'll use everyone's favorite index instrument, SPY. And we'll go back to March 2010.
Here's how the boring way to get rich would have performed:
SPY turned $10k into about $81k. Not bad.
Now, what if we add just a little spice to it? What if we add TQQQ, but keep it 80% SPY and only 20% TQQQ?
Here's what that looks like since March 2010:
Whoa, that's a massive difference.
Instead of just having $81,000 in November 2025, we'd have $227,000 by mixing in a leveraged vehicle.
The big question, though, is drawdown. Did we add an untenable amount of drawdown to get that result?
Not really.
As we see above, the max drawdown for TQQQ/SPY is 34.5% and SPY's max drawdown is 23.93%.
We get over 3x the return for a drawdown that's reasonably close to SPY. It's definitely higher but not outrageously so.
What are the downsides?
One, we'd have to rebalance every year. We'd have to sell shares if TQQQ had a massive year and add that money to SPY to keep the ratio right. But that's not much work.
Two, we would have to go through a bigger drawdown.
But the upside is pretty dramatic.
Is the upside worth the downside? That's what each investor has to decide.
But it's a lot more money for not that much more risk.
Talk to you soon.
DISCLAIMER: This is not financial advice.
It should not be assumed that the methods, techniques, or indicators presented in these videos will be profitable or that they will not result in losses. Past results are not necessarily indicative of future results. Examples presented are for educational purposes only. These set-ups are not solicitations of any order to buy or sell. The authors, the publisher, and all affiliates assume no responsibility for your trading results. There is a high degree of risk in trading. HYPOTHETICAL OR SIMULATED PERFORMANCE RESULTS HAVE CERTAIN INHERENT LIMITATIONS. UNLIKE AN ACTUAL PERFORMANCE RECORD, SIMULATED RESULTS DO NOT REPRESENT ACTUAL TRADING. ALSO, SINCE THE TRADES HAVE NOT ACTUALLY BEEN EXECUTED, THE RESULTS MAY HAVE UNDER- OR OVER-COMPENSATED FOR THE IMPACT, IF ANY, OF CERTAIN MARKET FACTORS, SUCH AS LACK OF LIQUIDITY. SIMULATED TRADING PROGRAMS IN GENERAL ARE ALSO SUBJECT TO THE FACT THAT THEY ARE DESIGNED WITH THE BENEFIT OF HINDSIGHT. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN.
