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Is there a Canadian equivalent of TQQQ (Nasdaq-100 3X Bull) ?

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Is there a Canadian equivalent of TQQQ (Nasdaq-100 3X Bull) ?

I know there's a Canadian equivalent of QLD (Nasdaq-100 2X Bull): HQU

But is there one for TQQQ as well or any that are very similar?
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Hi;

I am making an assumption here... are you aware of decay in leveraged ETFs? Leveraged ETFs are not for long term holdings because of this. and overtime, these products naturally by design go toward zero.
https://seekingalpha.com/article/186419 ... raged-etfs

OK, back to the topic at hand... no, not in Canada
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xgbsSS wrote: Hi;

I am making an assumption here... are you aware of decay in leveraged ETFs? Leveraged ETFs are not for long term holdings because of this. and overtime, these products naturally by design go toward zero.
https://seekingalpha.com/article/186419 ... raged-etfs

OK, back to the topic at hand... no, not in Canada
I think the holding leveraged ETF's long-term isn't as bad of an idea as many might think, especially if they're young and many years to recover any losses. Consider UPRO (3X S&P500 Bull) - if you held it from Jan 1951 to Feb 2015, you would've gotten annualized returns of 16.1% compared to only 7.7% of S&P although max drawdown for UPRO in that period was 97.7% compared to only 56.8% for S&P500. In that period, $10k would've turned to $169M for UPRO compared to only $1.29M for S&P - thats over 100 times higher.
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coolillboii wrote: I think the holding leveraged ETF's long-term isn't as bad of an idea as many might think, especially if they're young and many years to recover any losses. Consider UPRO (3X S&P500 Bull) - if you held it from Jan 1951 to Feb 2015, you would've gotten annualized returns of 16.1% compared to only 7.7% of S&P although max drawdown for UPRO in that period was 97.7% compared to only 56.8% for S&P500. In that period, $10k would've turned to $169M for UPRO compared to only $1.29M for S&P - thats over 100 times higher.
Um no... you are completely forgetting that these leveraged ETFs are reset daily. Did you actually read the page I posted? Because of the daily reset and the fact that downward movements have larger affects than upward movements, overtime, leveraged ETFs suffer from decay. This decay occurs precisely based on how these products are structured.

As evidence, look at ProShare's website for TQQQ. Total return in 5 years is 32.60%. Keep in mind, this isn't annualized return. Compare this to Invesco QQQ
https://www.proshares.com/funds/tqqq_pe ... quote.html
https://www.invesco.com/portal/site/us/ ... ductId=qqq

QQQ annualized return over 5 years is 14.58%. This means the total 5 year return is 97.49%. Now tell me why the 3x ETF is underperforming the straight index ETF?

Leveraged ETFs exist for day-traders/short term traders. If it was that easy, people would be suggesting leveraged ETFs for long term holders. This is also why ProShares doesn't give annualized return data or performance on $10000 data because the product itself is not designed to be held long term.
Last edited by xgbsSS on Sep 21st, 2019 7:02 pm, edited 2 times in total.
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This Seeking Alpha post is actually pro leveraged ETFs, but he demonstrates the problem of holding this long term. Look at the chart comparing TQQQ vs QQQ from 1999 to Aug 2018
https://seekingalpha.com/article/420336 ... fs-go-zero.
saupload_tqqq5_thumb1.png
Source: "Do All Leveraged ETFs Go To Zero?" Charlie Billelo, Seeking Alpha
The value of TQQQ is essentially zero.

And overtime while it could return back to break even in 30-40 years, what about your own life's longevity risk? (Can't cash out when you are dead)

So unless you are planning to do trading, I would not be buying TQQQ or any leveraged ETFs. They have their time and place. Based on what you have been posting (sorry this is me making assumptions), you are not ready to be using leveraged ETF products.
Last edited by xgbsSS on Sep 21st, 2019 7:04 pm, edited 1 time in total.
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xgbsSS wrote: Um no... you are completely forgetting that these leveraged ETFs are reset daily. Did you actually read the page I posted? Because of the daily reset and the fact that downward movements have larger affects than upward movements, overtime, leveraged ETFs suffer from decay. This decay occurs precisely based on how these products are structured.

As evidence, look at ProShare's website for TQQQ. Total return in 5 years is 32.60%. Keep in mind, this isn't annualized return. Compare this to Invesco QQQ
https://www.proshares.com/funds/tqqq_pe ... quote.html
https://www.invesco.com/portal/site/us/ ... ductId=qqq

QQQ annualized return over 5 years is 14.58%. This means the total 5 year return is 97.49%. Now tell me why the 3x ETF is underperforming the straight index ETF?

Leveraged ETFs exist for day-traders/short term traders. If it was that easy, people would be suggesting leveraged ETFs for long term holders. This is also why ProShares doesn't give annualized return data or performance on $10000 data because the product itself is not designed to be held long term.
TQQQ's 5-year return isn't 32.6% - its 352% while QQQ's 5-year return is only 94.9%
TQQQ's 5-year annualized return is 34.5% - I think you got this one completely wrong, lol
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coolillboii wrote: TQQQ's 5-year return isn't 32.6% - its 352% while QQQ's 5-year return is only 94.9%
TQQQ's 5-year annualized return is 34.5% - I think you got this one completely wrong, lol
Sorry you are correct in this case, I read the return wrong, but my point stands. Are you planning to trade or invest? If you are using this product as a short term trade, then fine, but if you are a long term investor, this generally won't work. Any movement downward would disproportionately reduce long term returns.And after this long bull run we have had, how are you planning to obtain the same returns that we have had now leveraged up without significant risk to your portfolio? Remember these products also can have a full revaluation reset meaning any huge volatility movements downward can immediately wipeout your investment through the drawdowns. And while models such as the ones you have posted have shown eventual recovery, the problem I have with the quote on this only is going by the index, and doesn't include the managed fees on the product itself which could wipe out the investment. A 1950s to today portfolio return also hasn't looked into the fact that you yourself can't survive through that time frame simply with life expectancy.

After a decade of high returns, I wouldn't be loading up on leveraged ETFs especially right now.
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xgbsSS wrote: Sorry you are correct in this case, I read the return wrong, but my point stands. Are you planning to trade or invest? If you are using this product as a short term trade, then fine, but if you are a long term investor, this generally won't work. Any movement downward would disproportionately reduce long term returns.And after this long bull run we have had, how are you planning to obtain the same returns that we have had now leveraged up without significant risk to your portfolio? Remember these products also can have a full revaluation reset meaning any huge volatility movements downward can immediately wipeout your investment through the drawdowns. And while models such as the ones you have posted have shown eventual recovery, the problem I have with the quote on this only is going by the index, and doesn't include the managed fees on the product itself which could wipe out the investment. A 1950s to today portfolio return also hasn't looked into the fact that you yourself can't survive through that time frame simply with life expectancy.

After a decade of high returns, I wouldn't be loading up on leveraged ETFs especially right now.
I had been 100% in TQQQ for almost a year (recently pulled out), including when it suddenly dropped by 60% in late 2018 (even though it mostly recovered) so I'll agree that in drawdown situations leveraged ETF's move down exceptionally fast, but its very hard to predict when a drawdown will occur (2007 drawdown occurred shortly after the market recovered from the 2000 drawdown which hit its bottom in 2003, instead of after a long period of high returns). I pulled out because of market uncertainty, I feel like if/when the China trade deal gets finalized, the market will continue to grow, especially because we already had a drawdown in late-2018. Till then, I'll likely invest in QLD (2X leveraged Nasdaq-100) or simply QQQ. However, if or when a market drawdown occurs, like the late-2018 one, it's a good time to invest in something like TQQQ. Leveraged ETFs significantly outperform the benchmark during market recovery periods. If a significant drawdown occurs, I will invest heavily in TQQQ using borrowed money (if I'm able to borrow) and during uncertain times like right now I will invest in something like QQQ or maybe QLD if outlook looks better.
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coolillboii wrote: I had been 100% in TQQQ for almost a year (recently pulled out), including when it suddenly dropped by 60% in late 2018 (even though it mostly recovered) so I'll agree that in drawdown situations leveraged ETF's move down exceptionally fast, but its very hard to predict when a drawdown will occur (2007 drawdown occurred shortly after the market recovered from the 2000 drawdown which hit its bottom in 2003, instead of after a long period of high returns). I pulled out because of market uncertainty, I feel like if/when the China trade deal gets finalized, the market will continue to grow, especially because we already had a drawdown in late-2018. Till then, I'll likely invest in QLD (2X leveraged Nasdaq-100) or simply QQQ. However, if or when a market drawdown occurs, like the late-2018 one, it's a good time to invest in something like TQQQ. Leveraged ETFs significantly outperform the benchmark during market recovery periods. If a significant drawdown occurs, I will invest heavily in TQQQ using borrowed money (if I'm able to borrow) and during uncertain times like right now I will invest in something like QQQ or maybe QLD if outlook looks better.
Best of luck then
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xgbsSS wrote: Best of luck then
Let them lose their money, no sense arguing with a wall.
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JoelK22976 wrote: Let them lose their money, no sense arguing with a wall.
He seems to understand there is risk and going to trade it. Whether my opinion in his choice in the matter is right or not is not relevant. I personally would't do it, so I will just wish him well. Based on how he was asking about why the difference in return on US vs Canadian listed ETF and where to find leveraged products, I was going to dismiss him as not knowing what he is doing. This kind of trading is way too risky for my taste when I think there is much safer ways to make these plays.

All in all, it is up to someone to decide how they want to play the trade. If we were to see a flash crash or sudden downturn in prices which can happen, people are sometimes swept away even if their trade might payout in the end. That is the risk I wouldn't take in this particular trade.
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xgbsSS wrote: He seems to understand there is risk and going to trade it. Whether my opinion in his choice in the matter is right or not is not relevant. I personally would't do it, so I will just wish him well. Based on how he was asking about why the difference in return on US vs Canadian listed ETF and where to find leveraged products, I was going to dismiss him as not knowing what he is doing. This kind of trading is way too risky for my taste when I think there is much safer ways to make these plays.

All in all, it is up to someone to decide how they want to play the trade. If we were to see a flash crash or sudden downturn in prices which can happen, people are sometimes swept away even if their trade might payout in the end. That is the risk I wouldn't take in this particular trade.
Do you disagree that investing in leveraged ETF's after a market downturn is a bad idea? It's hard to argue why it would be a bad idea, especially if the leveraged ETF in question loses over 80% in value. An investment like that would bring greater returns than anything else you could possibly do
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coolillboii wrote:
Do you disagree that investing in leveraged ETF's after a market downturn is a bad idea? It's hard to argue why it would be a bad idea, especially if the leveraged ETF in question loses over 80% in value. An investment like that would bring greater returns than anything else you could possibly do
The problem with such a product is when or how to utilize it. Remember, you will have further drawdown with volatility or if prices stay flat or stagnant. It's not full proof. You are assuming you can time a bottom and expect a "V" recovery.

Personally, I wouldnt touch it and would rather use leverage on individual shares where I have better control. But each to their own.
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Question: if both leverage bull and bear ETFs decay over the year, what if we short both? will we be guaranteed to make money over the long run?
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mkl38s wrote: Question: if both leverage bull and bear ETFs decay over the year, what if we short both? will we be guaranteed to make money over the long run?
You will face problems with share callback as these things are traded quickly in general. Borrow fee is probably very high.
Last edited by xgbsSS on Sep 22nd, 2019 9:03 am, edited 1 time in total.
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xgbsSS wrote: You will face problems with share callback as these things are traded quickly in general. Borrow fee is probably very higher.
Then would long (leap) PUT options out of the money for both work ?
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mkl38s wrote: Then would long (leap) PUT options out of the money for both work ?
I'm bad at options so can't answer that :P
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xgbsSS wrote: I'm bad at options so can't answer that :P
never mind, because of volatility, these PUT options priced ridiculously high, so long PUT may not be a play neither. Perhaps going the other way and sell naked CALL out of the money?
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xgbsSS wrote: The problem with such a product is when or how to utilize it. Remember, you will have further drawdown with volatility or if prices stay flat or stagnant. It's not full proof. You are assuming you can time a bottom and expect a "V" recovery.

Personally, I wouldnt touch it and would rather use leverage on individual shares where I have better control. But each to their own.
How does your portfolio currently look like? and how has it been for the past few years?

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