TQQQ Facts vs Myths | Nasdaq Proshares 3x Leveraged ETF

Summary

In this finance channel video, Jeff Beers discusses the TQQQ, a 3x leveraged ETF based on the QQQ. He shares his personal investment experiment, emphasizing it's not an all-in strategy and follows specific rules, like capping exposure at 20% of his portfolio. Beers clarifies myths, explains the fund's performance, and addresses concerns about market downturns. He also provides insights on hedging strategies and uses the 14-day RSI to guide buy/sell decisions, encouraging viewers to research and understand potential returns and risks.

Takeaways

• 📈 The TQQQ is a 3x leveraged ETF that tracks the daily performance of the NASDAQ 100 (QQQ).
• 💡 Jeff Beer's personal strategy involves a small portion of his portfolio in TQQQ, not an all-in strategy.
• 🚫 TQQQ is not suitable for those looking for a straightforward 3x return on the QQQ due to daily resets and leverage effects.
• 💼 The fund has been around since 2010, survived market crashes, and has assets under management of $10.36 billion.
• 📊 The expense ratio for TQQQ is 0.95%, which is higher than the average ETF.
• 📉 Despite recent downturns, TQQQ has shown significant long-term growth of 381% over five years.
• 🛑 Stock market circuit breakers prevent the extreme single-day losses that could theoretically devastate TQQQ.
• 📚 Historical data shows that the chances of QQQ falling 33% in a single day, which would decimate TQQQ, are extremely low.
• 📊 Volatility plays a significant role in the performance of TQQQ, affecting both potential gains and losses.
• 📈 A recovery scenario for QQQ could see TQQQ reaching $80 if QQQ returns to its all-time high within a month.
• 📉 In a worst-case scenario of maximum volatility over 10 years, TQQQ could decline significantly, but such an event would likely signal broader economic issues.

Q & A

What is TQQQ?

TQQQ is the 3x leveraged version of the QQQ ETF, which tracks the daily performance of the Nasdaq 100 index. It seeks to provide triple the daily returns of the Nasdaq 100.

What is the official name of the TQQQ fund?

The official name of the TQQQ fund is ProShares UltraPro QQQ ETF.

Since when has the TQQQ fund been in existence?

The TQQQ fund was formed on February 9, 2010.

What does the AUM of TQQQ indicate?

The AUM (Assets Under Management) of TQQQ is $10.36 billion, which signifies its size and solvency in the ETF market.

What is the expense ratio of TQQQ?

The expense ratio of TQQQ is 0.95 percent, which is higher than the average ETF.

How has TQQQ performed over the past 5 years?

Over the past 5 years, TQQQ has seen a return of 381 percent, even with market downturns like the COVID crash.

What is the significance of stock market circuit breakers in relation to TQQQ?

Stock market circuit breakers halt trading if the market drops significantly, which protects TQQQ from a single-day loss of 33 percent or more.

What is the largest daily percentage loss in the Nasdaq Composite?

The largest daily percentage loss in the Nasdaq Composite was during the pandemic on March 16, 2020, with a drop of minus 12 percent.

How does the presenter use the 14-day RSI to determine buy or sell points for TQQQ?

The presenter looks for RSI points under 40, preferably in the 30s, to buy TQQQ and considers selling when it goes over 60 or 70.

What is the presenter's view on hedging TQQQ?

The presenter considers other stocks and ETFs, including the regular QQQ, as part of his hedging strategy. He does not recommend going all-in on TQQQ.

What is the worst-case scenario for TQQQ according to the presenter?

The worst-case scenario for TQQQ would be if it took 10 years with maximum volatility to get back to all-time highs, in which case the investment would be significantly reduced.