er999's Bear Market Adventure (update ended)

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er999
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er999's Bear Market Adventure (update ended)

Post by er999 »

To take advantage of the market downturn, I’ve started buying about $400-500 (exact amount varies as it’s a percentage of my pay) of TQQQ every two weeks and plan to do so for the next 5 years (about $50k investment total). This is in a 401k account. No hedge right now, I figure that dollar cost averaging provides the hedge until the account gets bigger.

Why TQQQ and not UPRO?
I already have TMF/UPRO as part of a hedgefundie excellent adventure one time lump sum portfolio. I wanted to try something different rather than dollar cost average more UPRO.

Why TQQQ with a bet on tech? Hasn’t tech already outperformed this decade and won’t we see revision to the mean? Aren’t high interest rates bad for tech stocks?
I’ve been reading for years about how tech is overvalued and it’s stupid to overweight, you should instead buy international stocks (and I’ve been holding and continue to hold them for 15+ years) as they have a more favorable P/E ratio, the U.S. market can’t become 100% of the world equity market, etc. Past searchs of bogleheads have that sentiment back in 2017 yet those who overweighted technology then have been well rewarded, even after the current downturns.
Looking at current trends it’s hard to imagine that, say, China will outperform over the next decade. They have become more anti-democratic with now maybe a leader for life and have cracked down on their tech firms.
The large tech companies are sitting on large amounts of cash so don’t need to borrow to expand — there was a recent article in the New York Times that said in the 2008- 2010 downturn the tech companies made over 100 acquistions of smaller firms then and could do so again if this downturn turns into a recession.
Warren Buffet, the ultimate value investor, bought $600 million of apple stock in the first quarter of 2022 and is about 40% of Berkshire Hathaway so he doesn’t think at least one of the big tech companies is overvalued. It doesn’t seem like the tech world is like just before the 2000 crash as these companies are making money so I think that fear of a repeat of the nasdaq 2000 crash is keeping people from considering this strategy.
I think this downturn is an opportunity to make a small sector bet that has the potential with leverage to dramatically outperform. We can see what has worked in the past and it’s stupid to dismiss competely that the outperformance won’t continue by dismissing it as performance chasing. One can also say see what has worked and copy it. TQQQ has an advantage of being an index of 100 rather than a stock picker’s selection so we’ll have the more successful companies continue in the index and the less successful ones drop out. Of course TQQQ could end up being for the 2020s what the Janus funds were after the 2000 crash.

How can you post about this idea on a website dedicated to Jack Bogle? He’d be rolling in his grave!
Jack Bogle was also opposed to ETFs and international investing too but both are recommended and are now mainstream on this website. For a small portion of one’s portfolio this seems as reasonable as an emerging markets index fund choice. The HFEA threads have many replies so people are interested here.
TQQQ isn’t a low cost fund at all at 0.95% expense ratio and the fund provider proshares seems willing to sell anything — they have a pet care ETF at 0.5% expense ratio and a bunch of inverse funds. But it the potential returns are there maybe the high expenses are worth it — I’ve heard that argued about Avantis funds for their AVUV small cap value at 0.25% compared to Vanguard’s VBR at 0.07% as their potentially higher returns make the expense ratios worth it.

What’s your plan to eventually hedge?
Part of the reason I’m posting on here is to get people’s ideas as I know there are a few others are interested. In 2-3 years we’ll know if inflation is transient or not and can see if TMF will end up being a good hedge again.
My thought is that if you are contributing at least 25% of your portfolio value yearly those new contributions are sort of like your hedge (although not in the strict sense of course as new cash won't go up in value like a true hedge would). If TQQQ crashes to > 85% of its value then you can buy new shares with new contributions and keep going. Even though TMF is low priced it doesn’t make sense to buy now since I’m counting on TQQQ to drive returns, not TMF. You just have to be willing to keep contributing even though you lose 1-2 years contributions and not think of it as wasted money, which would still be tough emotionally. Any ideas?
Last edited by er999 on Tue Feb 07, 2023 1:41 pm, edited 1 time in total.
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Re: er999's Bear Market Adventure

Post by Nathan Drake »

Can we name this strategy Hedgefundie’s Bogus Journey?
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Re: er999's Bear Market Adventure

Post by VTI »

Thank you for the high-effort post.
Why TQQQ and not UPRO?
I already have TMF/UPRO as part of a hedgefundie excellent adventure one time lump sum portfolio. I wanted to try something different rather than dollar cost average more UPRO.
Tread carefully, friend. If you must buy a single 3x-leveraged ETF, I would suggest buying more UPRO.

In theory, TQQQ might seem less risky and less volatile than UPRO because it's more growthy, and growth is both less risky and less volatile than value. (Sorry, NathanDrake! No premium, no pain.) And indeed, in backtests, TQQQ has been less volatile and has suffered smaller drawdowns.

However, TQQQ has far greater sector concentration than UPRO. This is a huge risk. Some risks offer compensation (e.g. buying stocks versus bonds), but you can't expect to be compensated for reducing the sector diversity of your portfolio.
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Re: er999's Bear Market Adventure

Post by deepvalleys »

Leveraged ETFs should not be held long-term, as far as I know. They are meant for daytrading.
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Re: er999's Bear Market Adventure

Post by nisiprius »

deepvalleys wrote: Sun May 22, 2022 8:47 am Leveraged ETFs should not be held long-term, as far as I know. They are meant for daytrading.
1) This is correct.

2) Just to report activity on the forum I don't agree with and am skeptical about, the HEDGEFUNDIE threads and skierincolorado's threads represent sophisticated and carefully-studied approaches to strategies that use leveraged ETFs as part of a financially-engineered strategy. In particularly they use both stock and bond ETFs, and they require a careful and frequent rebalancing regime. They are not buying-and-holding individual leveraged ETFs.

3) In a long and detailed posting--again I don't agree with it, but it is long and detailed and should be read and understood by anyone trying this kind of thing. I almost think er999 has read it, because their presentation is in a similar style. Anyway, HEDGEFUNDIE wrote this:
Why not just 100% UPRO?

Because the drawdowns will be super deep during market crashes, and it may take decades to recover. Here is the backtest between 40/60 3xS&P/3xLTT (Portfolio 1) and 100% 3xS&P (Portfolio 2).

Image
This would apply even more to 100% TQQQ.

4) I have yet to read any coherent explanation of why you should prefer stocks based on what exchange they are listed on. The fans of QQQ cannot seem to go any deeper than a) performance, typically recent performance, and b) vague assertions that they like tech, but they don't mind that QQQ has so much stuff in it that isn't tech, and they don't mind that there is so much tech that isn't in QQQ, or that QQQ isn't the total Nasdaq market.
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Re: er999's Bear Market Adventure

Post by Nathan Drake »

nisiprius wrote: Sun May 22, 2022 10:07 am 4) I have yet to read any coherent explanation of why you should prefer stocks based on what exchange they are listed on. The fans of QQQ cannot seem to go any deeper than a) performance, typically recent performance, and b) vague assertions that they like tech, but they don't mind that QQQ has so much stuff in it that isn't tech, and they don't mind that there is so much tech that isn't in QQQ, or that QQQ isn't the total Nasdaq market.
You would prefer QQQ because it's the future and has the best returns!

Except, outside the recent past, it really doesn't.

This is a performance chasing strategy that assumes a 25% correction is the most amount of pain that QQQ investors will need to endure. Of course, if we actually saw what happened to QQQ during the 00s and how long it took to recover in hindsight, nobody would have flooded into a strategy like this with much success.
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Re: er999's Bear Market Adventure

Post by hiddenpower »

Nathan Drake wrote: Sun May 22, 2022 12:46 pm
nisiprius wrote: Sun May 22, 2022 10:07 am 4) I have yet to read any coherent explanation of why you should prefer stocks based on what exchange they are listed on. The fans of QQQ cannot seem to go any deeper than a) performance, typically recent performance, and b) vague assertions that they like tech, but they don't mind that QQQ has so much stuff in it that isn't tech, and they don't mind that there is so much tech that isn't in QQQ, or that QQQ isn't the total Nasdaq market.
You would prefer QQQ because it's the future and has the best returns!

Except, outside the recent past, it really doesn't.
It has basically ever since 2000.

OP I'm interested in doing something like this with a small portfolio. I dropped half into TQQQ and left half in cash, getting about 1.5x overall leverage. If I see another dramatic decline, I'll drop the rest in and diamond hands it for a few years. I'm still exploring LETFS more and will be refining as I learn. If the market instead rips and we see bonds acting normal again for a few months, I'll consider converting to a HFEA-esque strategy, to preserve gains.

I've considered alternative strategies where people DCA in LEAPS, but this seems simpler and can be held longer assuming no near-wipeout event. With both you pay the price of volatility, up front for the LEAPS and on-the-way for the LETFS.
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Re: er999's Bear Market Adventure

Post by Nathan Drake »

hiddenpower wrote: Sun May 22, 2022 1:56 pm
Nathan Drake wrote: Sun May 22, 2022 12:46 pm
nisiprius wrote: Sun May 22, 2022 10:07 am 4) I have yet to read any coherent explanation of why you should prefer stocks based on what exchange they are listed on. The fans of QQQ cannot seem to go any deeper than a) performance, typically recent performance, and b) vague assertions that they like tech, but they don't mind that QQQ has so much stuff in it that isn't tech, and they don't mind that there is so much tech that isn't in QQQ, or that QQQ isn't the total Nasdaq market.
You would prefer QQQ because it's the future and has the best returns!

Except, outside the recent past, it really doesn't.
It has basically ever since 2000.
No, it's underperformed the US TSM and has dramatically underperformed SCV since 2000. It has featured a significantly higher drawdown, worse sharpe ratio, and higher volatility.

https://www.portfoliovisualizer.com/bac ... ion3_3=100

It's a huge risk, in the face of uncertainty of inflation and interest rates, to leverage up significantly on a sector that is still by most metrics highly overvalued. In periods of re-valuation, new lows are essentially tested quite frequently on the way to the bottom. And it could take over a decade to get back to all time highs.
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Re: er999's Bear Market Adventure

Post by hiddenpower »

Nathan Drake wrote: Sun May 22, 2022 2:54 pm
hiddenpower wrote: Sun May 22, 2022 1:56 pm
Nathan Drake wrote: Sun May 22, 2022 12:46 pm
nisiprius wrote: Sun May 22, 2022 10:07 am 4) I have yet to read any coherent explanation of why you should prefer stocks based on what exchange they are listed on. The fans of QQQ cannot seem to go any deeper than a) performance, typically recent performance, and b) vague assertions that they like tech, but they don't mind that QQQ has so much stuff in it that isn't tech, and they don't mind that there is so much tech that isn't in QQQ, or that QQQ isn't the total Nasdaq market.
You would prefer QQQ because it's the future and has the best returns!

Except, outside the recent past, it really doesn't.
It has basically ever since 2000.
No, it's underperformed the US TSM and has dramatically underperformed SCV since 2000. It has featured a significantly higher drawdown, worse sharpe ratio, and higher volatility.

https://www.portfoliovisualizer.com/bac ... ion3_3=100

It's a huge risk, in the face of uncertainty of inflation and interest rates, to leverage up significantly on a sector that is still by most metrics highly overvalued. In periods of re-valuation, new lows are essentially tested quite frequently on the way to the bottom. And it could take over a decade to get back to all time highs.
Cherry-picking data to 2000 is just as risky. Move the needle forward to 2001, 2002, etc. and you'll see QQQ dominates small cap value which also lags S&P500 for two whole decades. If you focus on dates other than the 2000 bubble, then you'll see better std-dev, sharpe, etc for QQQ.

portfoliovisualizer: changing dates.
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Re: er999's Bear Market Adventure

Post by 1789 »

There has been many mutual funds from Fidelity that crashed QQQ’s performance by far including and excluding the dot com bubble period.
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Re: er999's Bear Market Adventure

Post by freyj6 »

Like the popular ARKK thread here, created the day before ARKK peaked and subsequently lost over 70% of its value, this may be a useful thread to bookmark for the next wave of new investors.
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Re: er999's Bear Market Adventure

Post by hiddenpower »

freyj6 wrote: Sun May 22, 2022 3:49 pm Like the popular ARKK thread here, created the day before ARKK peaked and subsequently lost over 70% of its value, this may be a useful thread to bookmark for the next wave of new investors.
ARKKs drawdown is akin to the 2000 crash. You really think we are in for that again?
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Re: er999's Bear Market Adventure

Post by whodidntante »

I do not recommend overweighting growth stocks. Do what you like.
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Re: er999's Bear Market Adventure

Post by Nathan Drake »

hiddenpower wrote: Sun May 22, 2022 3:22 pm
Nathan Drake wrote: Sun May 22, 2022 2:54 pm
hiddenpower wrote: Sun May 22, 2022 1:56 pm
Nathan Drake wrote: Sun May 22, 2022 12:46 pm
nisiprius wrote: Sun May 22, 2022 10:07 am 4) I have yet to read any coherent explanation of why you should prefer stocks based on what exchange they are listed on. The fans of QQQ cannot seem to go any deeper than a) performance, typically recent performance, and b) vague assertions that they like tech, but they don't mind that QQQ has so much stuff in it that isn't tech, and they don't mind that there is so much tech that isn't in QQQ, or that QQQ isn't the total Nasdaq market.
You would prefer QQQ because it's the future and has the best returns!

Except, outside the recent past, it really doesn't.
It has basically ever since 2000.
No, it's underperformed the US TSM and has dramatically underperformed SCV since 2000. It has featured a significantly higher drawdown, worse sharpe ratio, and higher volatility.

https://www.portfoliovisualizer.com/bac ... ion3_3=100

It's a huge risk, in the face of uncertainty of inflation and interest rates, to leverage up significantly on a sector that is still by most metrics highly overvalued. In periods of re-valuation, new lows are essentially tested quite frequently on the way to the bottom. And it could take over a decade to get back to all time highs.
Cherry-picking data to 2000 is just as risky. Move the needle forward to 2001, 2002, etc. and you'll see QQQ dominates small cap value which also lags S&P500 for two whole decades. If you focus on dates other than the 2000 bubble, then you'll see better std-dev, sharpe, etc for QQQ.

portfoliovisualizer: changing dates.
What you have highlighted is the sensitivity to start/end dates. The longer your investment horizon, the sensitivity to start dates matters less. I have picked the longest period of data we have available, while you have specifically cherry picked a date after SCV run-up and coinciding in QQQ outperformance this last decade.

This says nothing as to whether a leveraged QQQ strategy will outperform. Historically over the longest sample size have available, your statement that QQQ is the best performing asset was categorically false. Most arguments for QQQ are based on the last 5-10 years of outperformance and neglect the reality of the prior 10.

There is no academic framework for why a tech-concentrated portfolio would outperform. If QQQ loads higher on growth, then the academic literature suggests it will underperform over the long term because investors seeking growth tend to overpay for it.
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Re: er999's Bear Market Adventure

Post by hiddenpower »

Nathan Drake wrote: Sun May 22, 2022 4:14 pm
hiddenpower wrote: Sun May 22, 2022 3:22 pm
Nathan Drake wrote: Sun May 22, 2022 2:54 pm
hiddenpower wrote: Sun May 22, 2022 1:56 pm
Nathan Drake wrote: Sun May 22, 2022 12:46 pm

You would prefer QQQ because it's the future and has the best returns!

Except, outside the recent past, it really doesn't.
It has basically ever since 2000.
No, it's underperformed the US TSM and has dramatically underperformed SCV since 2000. It has featured a significantly higher drawdown, worse sharpe ratio, and higher volatility.

https://www.portfoliovisualizer.com/bac ... ion3_3=100

It's a huge risk, in the face of uncertainty of inflation and interest rates, to leverage up significantly on a sector that is still by most metrics highly overvalued. In periods of re-valuation, new lows are essentially tested quite frequently on the way to the bottom. And it could take over a decade to get back to all time highs.
Cherry-picking data to 2000 is just as risky. Move the needle forward to 2001, 2002, etc. and you'll see QQQ dominates small cap value which also lags S&P500 for two whole decades. If you focus on dates other than the 2000 bubble, then you'll see better std-dev, sharpe, etc for QQQ.

portfoliovisualizer: changing dates.
What you have highlighted is the sensitivity to start/end dates. The longer your investment horizon, the sensitivity to start dates matters less. I have picked the longest period of data we have available, while you have specifically cherry picked a date after SCV run-up and coinciding in QQQ outperformance this last decade.

This says nothing as to whether a leveraged QQQ strategy will outperform. Historically over the longest sample size have available, your statement that QQQ is the best performing asset was categorically false. Most arguments for QQQ are based on the last 5-10 years of outperformance and neglect the reality of the prior 10.

There is no academic framework for why a tech-concentrated portfolio would outperform. If QQQ loads higher on growth, then the academic literature suggests it will underperform over the long term because investors seeking growth tend to overpay for it.

I would definitely discount 2000 since it was an anomaly. I don’t think it makes sense as a reasonable start date, it just fits your narrative best.
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Re: er999's Bear Market Adventure

Post by freyj6 »

hiddenpower wrote: Sun May 22, 2022 4:09 pm
freyj6 wrote: Sun May 22, 2022 3:49 pm Like the popular ARKK thread here, created the day before ARKK peaked and subsequently lost over 70% of its value, this may be a useful thread to bookmark for the next wave of new investors.
ARKKs drawdown is akin to the 2000 crash. You really think we are in for that again?
I’m simply saying that a thread about buying into a 3x leveraged ETF may turn into another useful cautionary tale.

Beyond that, I’m not sure why you’d expect QQQ to outperform. It’s currently sitting at a P/E of 22, which historically is very high. The value/growth spread is still in the 95th percentile. Even at the 50th percentile, growth tends to underperform value over long time periods.

So yes, I think levering up on expensive segments of the market that have historically underperformed may not be the ideal strategy.
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Re: er999's Bear Market Adventure

Post by er999 »

freyj6 wrote: Sun May 22, 2022 3:49 pm Like the popular ARKK thread here, created the day before ARKK peaked and subsequently lost over 70% of its value, this may be a useful thread to bookmark for the next wave of new investors.
Agreed, that’s why I wanted to document the idea in real time. If I end up losing all the investment (which is possible) it serves as a warning not to stray from the one true path of total market / total international / total bond and to limit deviations only to small cap value and for the old school maybe reits. Difference is I’m buying while the price is dropping unlike the Ark thread that was posted at market peak.

I did read Hedgefundie’s threads extensively which is why I made the intro purposely similar. It’s a separate thread as the idea is to buy regularly into a leveraged fund (rather than lump sum) and then add a hedge (maybe just cash or tmf) once the total amount invested becomes large relative to the bi-weekly contributions. It won’t work if the market goes sideways for years of course. It’s not as insightful as Hedgefundie’s post but I still thought it might be interesting to some rather than adding on the the existing Hedgefundie thread.
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Re: er999's Bear Market Adventure

Post by celia »

Er999, Have you considered doing this purchase in a Roth IRA instead? or a Roth 401K that isn’t just a percentage of the entire 401K?

In other words, isolate your “bets” from the more reliable assets so you can track the account values separately, especially if you analyze your assets over time.
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Re: er999's Bear Market Adventure

Post by Nathan Drake »

hiddenpower wrote: Sun May 22, 2022 4:27 pm
Nathan Drake wrote: Sun May 22, 2022 4:14 pm
hiddenpower wrote: Sun May 22, 2022 3:22 pm
Nathan Drake wrote: Sun May 22, 2022 2:54 pm
hiddenpower wrote: Sun May 22, 2022 1:56 pm

It has basically ever since 2000.
No, it's underperformed the US TSM and has dramatically underperformed SCV since 2000. It has featured a significantly higher drawdown, worse sharpe ratio, and higher volatility.

https://www.portfoliovisualizer.com/bac ... ion3_3=100

It's a huge risk, in the face of uncertainty of inflation and interest rates, to leverage up significantly on a sector that is still by most metrics highly overvalued. In periods of re-valuation, new lows are essentially tested quite frequently on the way to the bottom. And it could take over a decade to get back to all time highs.
Cherry-picking data to 2000 is just as risky. Move the needle forward to 2001, 2002, etc. and you'll see QQQ dominates small cap value which also lags S&P500 for two whole decades. If you focus on dates other than the 2000 bubble, then you'll see better std-dev, sharpe, etc for QQQ.

portfoliovisualizer: changing dates.
What you have highlighted is the sensitivity to start/end dates. The longer your investment horizon, the sensitivity to start dates matters less. I have picked the longest period of data we have available, while you have specifically cherry picked a date after SCV run-up and coinciding in QQQ outperformance this last decade.

This says nothing as to whether a leveraged QQQ strategy will outperform. Historically over the longest sample size have available, your statement that QQQ is the best performing asset was categorically false. Most arguments for QQQ are based on the last 5-10 years of outperformance and neglect the reality of the prior 10.

There is no academic framework for why a tech-concentrated portfolio would outperform. If QQQ loads higher on growth, then the academic literature suggests it will underperform over the long term because investors seeking growth tend to overpay for it.

I would definitely discount 2000 since it was an anomaly. I don’t think it makes sense as a reasonable start date, it just fits your narrative best.
And your narrative that cherry picks a bad start AND end date for value is valid? Mine just includes the entire sample

QQQ is not a diversified index. It’s a tech heavy, growth heavy listing. Why would anyone consider this an adequate strategy unless they were performance chasing?
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Re: er999's Bear Market Adventure

Post by nisiprius »

hiddenpower wrote: Sun May 22, 2022 4:27 pm...I would definitely discount 2000 since it was an anomaly...
The stock market always looks safe and predictable if you throw out all the "anomalies." But you shouldn't. The anomalies are an integral part of the stock market. They are part of the risk that accounts for the risk premium. They are part of the risk for which you need to have risk tolerance.

The relevant thing about "anomalous" 2000-2003 is not that Total Stock (green) and 500 Index (red) fell -44%, but that the Nasdaq funds QQQ (blue) and RYOCX (red) fell -88%.

Source

Image

That's not "twice as far," it's worse. It's a cut of $10,000 to $1,200. A fall of -44% cuts $10,000 to $4,400. A second -44% fall takes it to $2,464. A third -44% fall takes it to $1,380. The fall in QQQ was equivalent to more than three -44% falls stacked on top of each other.

And that's straight QQQ, not daily-triple-leveraged.
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Re: er999's Bear Market Adventure

Post by Startled Cat »

I think the behavioral explanation for the value factor relies on people doing things like this. So while I don't think it's a good idea, don't let me stop you.
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Re: er999's Bear Market Adventure

Post by nisiprius »

er999 wrote: Sat May 21, 2022 8:27 pm...Why TQQQ with a bet on tech? Hasn’t tech already outperformed this decade and won’t we see revision to the mean? Aren’t high interest rates bad for tech stocks?...
If what you want is a bet on tech, QQQ is an odd way to do it. It's not a portfolio of tech stocks, it's a portfolio of stocks that couldn't get listed on the NYSE.

Image

QQQ is only about half tech. And the stock market itself (VTI) is currently about a quarter tech. If you combine technology and telecom, then QQQ is about ⅔ tech-and-telecom and VTI is about ⅓ tech-and-telecom. So a heavy tilt for sure, but still, what's the point?

If you want to bet on tech, why do you want all those non-tech stocks?

And if you want to bet on tech, why don't you want all the tech stocks QQQ is missing?

Source

Image

VGT, the Vanguard Technology index ETF, is 90% tech, a clean bet on tech-and-telecom. But QQQ only holds 11.6% of the 361 stocks that are in VGT. It looks as if QQQ is missing about 230 tech stocks, and about half of the technology sector by market cap.

And it's not as if there were no triple-leveraged tech ETFs. TECL, Direxion Daily Technology Bull 3X ETF is just such a fund, and it is 90% tech according to Morningstar.
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Re: er999's Bear Market Adventure

Post by 9-5 Suited »

As a macro comment, I find it interesting how people enjoy starting and following leveraged investment threads of various flavors. It's like some kind of vicarious excitement, like watching a reality show or something. I find the whole enterprise pretty uninteresting, althought market_timer himself (the original) was such a fascinating person and had such interesting commentary that his was well worth the read.

I guess the rest of the forum on the whole could be renamed "John Bogle's Great Adventure: The 60/40 market portfolio" so these kinds of things are a fun distraction for some. But they make niche investing strategies such a focal point of day-to-day life, and often have this underlying tone of 'here's how I'm going to outsmart the rest of you'.

I encourage casual readers following these threads to treat them closer to entertainment, and not feel any FOMO or need to attempt to replicate this type of thing. Leveraging up to gain additional return ain't exactly a new idea, despite it's myriad implementations.
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Re: er999's Bear Market Adventure

Post by er999 »

celia wrote: Sun May 22, 2022 5:02 pm Er999, Have you considered doing this purchase in a Roth IRA instead? or a Roth 401K that isn’t just a percentage of the entire 401K?

In other words, isolate your “bets” from the more reliable assets so you can track the account values separately, especially if you analyze your assets over time.
It’s in a brokeragelink subaccount at Fidelity so is like a separate account although I see my entire 401k balance when I login. This will allow me to follow the performance separately.

I didn’t do in a Roth IRA as my current Roth is with vanguard who bans leveraged funds. My 401k yearly contributions (employer/employee) are about $40k a year so this is using 25% of new 401k money. I didn’t want to bother with opening a separate Roth account but you are right that if I strongly believed in it buying $6k Roth in a Roth might be better than $10k a year in a 401k as it would be completely tax free if it does work out. It’s only a small bet so the rest is mostly standard boglehead investments.
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hiddenpower
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Re: er999's Bear Market Adventure

Post by hiddenpower »

nisiprius wrote: Sun May 22, 2022 7:43 pm
er999 wrote: Sat May 21, 2022 8:27 pm...Why TQQQ with a bet on tech? Hasn’t tech already outperformed this decade and won’t we see revision to the mean? Aren’t high interest rates bad for tech stocks?...
If what you want is a bet on tech, QQQ is an odd way to do it. It's not a portfolio of tech stocks, it's a portfolio of stocks that couldn't get listed on the NYSE.


QQQ is only about half tech. And the stock market itself (VTI) is currently about a quarter tech. If you combine technology and telecom, then QQQ is about ⅔ tech-and-telecom and VTI is about ⅓ tech-and-telecom. So a heavy tilt for sure, but still, what's the point?

If you want to bet on tech, why do you want all those non-tech stocks?

And if you want to bet on tech, why don't you want all the tech stocks QQQ is missing?


VGT, the Vanguard Technology index ETF, is 90% tech, a clean bet on tech-and-telecom. But QQQ only holds 11.6% of the 361 stocks that are in VGT. It looks as if QQQ is missing about 230 tech stocks, and about half of the technology sector by market cap.

And it's not as if there were no triple-leveraged tech ETFs. TECL, Direxion Daily Technology Bull 3X ETF is just such a fund, and it is 90% tech according to Morningstar.
The issue with VGT is that it's too concentrated. 2 holdings, aapl and msft make up 40% of the fund and it doesn't include the likes of Google or Meta. It's been highly correlated but with the way the holdings are skewing, not sure about it in the long term.

QQQ has some non-tech exposure so it's a simpler all-in-one fund with a tilt.

While it has a higher ER, it's a broad market index fund. That gives some benefit:
- Easier to perfectly hedge with futures (shorting /NQ).
- You can free up buying power with portfolio margin turned on through buying puts on the SPX (S&P500).
- Lower margin requirements
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hiddenpower
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Re: er999's Bear Market Adventure

Post by hiddenpower »

er999 wrote: Sun May 22, 2022 9:11 pm
celia wrote: Sun May 22, 2022 5:02 pm Er999, Have you considered doing this purchase in a Roth IRA instead? or a Roth 401K that isn’t just a percentage of the entire 401K?

In other words, isolate your “bets” from the more reliable assets so you can track the account values separately, especially if you analyze your assets over time.
It’s in a brokeragelink subaccount at Fidelity so is like a separate account although I see my entire 401k balance when I login. This will allow me to follow the performance separately.

I didn’t do in a Roth IRA as my current Roth is with vanguard who bans leveraged funds. My 401k yearly contributions (employer/employee) are about $40k a year so this is using 25% of new 401k money. I didn’t want to bother with opening a separate Roth account but you are right that if I strongly believed in it buying $6k Roth in a Roth might be better than $10k a year in a 401k as it would be completely tax free if it does work out. It’s only a small bet so the rest is mostly standard boglehead investments.
I used my HSA. Be prepared to diamond hands this.
goodoboy
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Re: er999's Bear Market Adventure

Post by goodoboy »

er999 wrote: Sat May 21, 2022 8:27 pm To take advantage of the market downturn, I’ve started buying about $400-500 (exact amount varies as it’s a percentage of my pay) of TQQQ every two weeks and plan to do so for the next 5 years (about $50k investment total). This is in a 401k account. No hedge right now, I figure that dollar cost averaging provides the hedge until the account gets bigger.

Why TQQQ and not UPRO?
I already have TMF/UPRO as part of a hedgefundie excellent adventure one time lump sum portfolio. I wanted to try something different rather than dollar cost average more UPRO.

Why TQQQ with a bet on tech? Hasn’t tech already outperformed this decade and won’t we see revision to the mean? Aren’t high interest rates bad for tech stocks?
I’ve been reading for years about how tech is overvalued and it’s stupid to overweight, you should instead buy international stocks (and I’ve been holding and continue to hold them for 15+ years) as they have a more favorable P/E ratio, the U.S. market can’t become 100% of the world equity market, etc. Past searchs of bogleheads have that sentiment back in 2017 yet those who overweighted technology then have been well rewarded, even after the current downturns.
Looking at current trends it’s hard to imagine that, say, China will outperform over the next decade. They have become more anti-democratic with now maybe a leader for life and have cracked down on their tech firms.
The large tech companies are sitting on large amounts of cash so don’t need to borrow to expand — there was a recent article in the New York Times that said in the 2008- 2010 downturn the tech companies made over 100 acquistions of smaller firms then and could do so again if this downturn turns into a recession.
Warren Buffet, the ultimate value investor, bought $600 million of apple stock in the first quarter of 2022 and is about 40% of Berkshire Hathaway so he doesn’t think at least one of the big tech companies is overvalued. It doesn’t seem like the tech world is like just before the 2000 crash as these companies are making money so I think that fear of a repeat of the nasdaq 2000 crash is keeping people from considering this strategy.
I think this downturn is an opportunity to make a small sector bet that has the potential with leverage to dramatically outperform. We can see what has worked in the past and it’s stupid to dismiss competely that the outperformance won’t continue by dismissing it as performance chasing. One can also say see what has worked and copy it. TQQQ has an advantage of being an index of 100 rather than a stock picker’s selection so we’ll have the more successful companies continue in the index and the less successful ones drop out. Of course TQQQ could end up being for the 2020s what the Janus funds were after the 2000 crash.

How can you post about this idea on a website dedicated to Jack Bogle? He’d be rolling in his grave!
Jack Bogle was also opposed to ETFs and international investing too but both are recommended and are now mainstream on this website. For a small portion of one’s portfolio this seems as reasonable as an emerging markets index fund choice. The HFEA threads have many replies so people are interested here.
TQQQ isn’t a low cost fund at all at 0.95% expense ratio and the fund provider proshares seems willing to sell anything — they have a pet care ETF at 0.5% expense ratio and a bunch of inverse funds. But it the potential returns are there maybe the high expenses are worth it — I’ve heard that argued about Avantis funds for their AVUV small cap value at 0.25% compared to Vanguard’s VBR at 0.07% as their potentially higher returns make the expense ratios worth it.

What’s your plan to eventually hedge?
Part of the reason I’m posting on here is to get people’s ideas as I know there are a few others are interested. In 2-3 years we’ll know if inflation is transient or not and can see if TMF will end up being a good hedge again.
My thought is that if you are contributing at least 25% of your portfolio value yearly those new contributions are sort of like your hedge (although not in the strict sense of course as new cash won't go up in value like a true hedge would). If TQQQ crashes to > 85% of its value then you can buy new shares with new contributions and keep going. Even though TMF is low priced it doesn’t make sense to buy now since I’m counting on TQQQ to drive returns, not TMF. You just have to be willing to keep contributing even though you lose 1-2 years contributions and not think of it as wasted money, which would still be tough emotionally. Any ideas?
Hello er999 ,

Great post. I agree with everything you are said.

This is a no brainer investment. I will deposit $2000 in TQQQ today and DCA at $250 a month for the next 20 years. I hope we become rich soon.

This investment is in my taxable account so I can redraw the big money out and spend it as I want and no taxes penalty/issues dealing with ROTH IRA.

Thank you for the insight.
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Re: er999's Bear Market Adventure

Post by Tamalak »

Wasn't it calculated that for long term holding, something like 1.5x leverage was historically ideal? More than that and volatility will decay returns, less than that and you're not taking full advantage.
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Taylor Larimore
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Re: er999's Bear Market Adventure

Post by Taylor Larimore »

ER999:

This is one of your earlier posts dated December 5, 2020:
Maybe I should just stick with total stock and total international as that is aggressive enough for money with an uncertain time period (could be spent on luxuries in a few years or could be saved longer and just added to retirement).
Sounds like good advice to me.

Best wishes.
Taylor
Jack Bogle's Words of Wisdom: "I favor the all-market index index fund as the best choice for most investors."
"Simplicity is the master key to financial success." -- Jack Bogle
hoofaman
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Re: er999's Bear Market Adventure

Post by hoofaman »

OP, didn't you recently make a post on a 5% allocation to SPCE? Seems like you have a lot of risky bets going on

What percent of your portfolio is invested in total stock market index fund and what percent is allocated to meme stock investing and other risky bets?
goodoboy
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Re: er999's Bear Market Adventure

Post by goodoboy »

hoofaman wrote: Mon Jun 06, 2022 1:44 pm OP, didn't you recently make a post on a 5% allocation to SPCE? Seems like you have a lot of risky bets going on

What percent of your portfolio is invested in total stock market index fund and what percent is allocated to meme stock investing and other risky bets?
Hello hoofaman,

To obtain millions quickly, it always take risky bets. Unless someone is born rich, you have to take smart calculated high risks bets at right time to get rich in the stock market business.

If you want average returns, just DCA SP 500 index forever, and even that is kinda risky depending on who you talking about.

Some of us want to get rich fast. Like 10 years fast. We work full times jobs, so we can run a business on the side. All we have the stock the market in our tool box.

Life has to have more then work full time job for 30 years, max out 401k and then retire at 64 years old with your nest egg. And you better diverse that 401K right, cause you might be 64 and retire this year and take a big hit.

Noo, forget that. Lets get rich and lets get rich quick if we can.
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er999
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Re: er999's Bear Market Adventure

Post by er999 »

hoofaman wrote: Mon Jun 06, 2022 1:44 pm OP, didn't you recently make a post on a 5% allocation to SPCE? Seems like you have a lot of risky bets going on

What percent of your portfolio is invested in total stock market index fund and what percent is allocated to meme stock investing and other risky bets?
~ 90-92% indexed with current funds. (45% vti, 10% vbr, 15% vxus, 10% vss, 10% vnq, 10% bonds as vglt). Rest speculative (2-3% virgin galactic single stock as per my other thread also a little in another speculative individual stock bet (Joby aerospace) that I didn’t post as I didn’t think there’s be any interest in discussing it, the balance in HFEA)

- with new money ~ 20% of new contributions to tqqq, rest into traditional index funds strategy. Current portfolio is about 20x annual contributions but due to high living expenses (paid off house but with kids in private 3rd and 5th grade and wanted to have the option of paying for an expensive college) still need to work another 10-12 years. If all speculative money lost maybe means I work an extra 2-3 years (which I might have had to anyway until kid expenses go down).
Nathan Drake
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Re: er999's Bear Market Adventure

Post by Nathan Drake »

goodoboy wrote: Mon Jun 06, 2022 2:42 pm
hoofaman wrote: Mon Jun 06, 2022 1:44 pm OP, didn't you recently make a post on a 5% allocation to SPCE? Seems like you have a lot of risky bets going on

What percent of your portfolio is invested in total stock market index fund and what percent is allocated to meme stock investing and other risky bets?
Hello hoofaman,

To obtain millions quickly, it always take risky bets. Unless someone is born rich, you have to take smart calculated high risks bets at right time to get rich in the stock market business.

If you want average returns, just DCA SP 500 index forever, and even that is kinda risky depending on who you talking about.

Some of us want to get rich fast. Like 10 years fast. We work full times jobs, so we can run a business on the side. All we have the stock the market in our tool box.

Life has to have more then work full time job for 30 years, max out 401k and then retire at 64 years old with your nest egg. And you better diverse that 401K right, cause you might be 64 and retire this year and take a big hit.

Noo, forget that. Lets get rich and lets get rich quick if we can.
Serious question

Is this post satire or sarcasm?
20% VOO | 20% VXUS | 20% AVUV | 20% AVDV | 20% AVES
goodoboy
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Re: er999's Bear Market Adventure

Post by goodoboy »

Nathan Drake wrote: Mon Jun 06, 2022 9:03 pm
goodoboy wrote: Mon Jun 06, 2022 2:42 pm
hoofaman wrote: Mon Jun 06, 2022 1:44 pm OP, didn't you recently make a post on a 5% allocation to SPCE? Seems like you have a lot of risky bets going on

What percent of your portfolio is invested in total stock market index fund and what percent is allocated to meme stock investing and other risky bets?
Hello hoofaman,

To obtain millions quickly, it always take risky bets. Unless someone is born rich, you have to take smart calculated high risks bets at right time to get rich in the stock market business.

If you want average returns, just DCA SP 500 index forever, and even that is kinda risky depending on who you talking about.

Some of us want to get rich fast. Like 10 years fast. We work full times jobs, so we can run a business on the side. All we have the stock the market in our tool box.

Life has to have more then work full time job for 30 years, max out 401k and then retire at 64 years old with your nest egg. And you better diverse that 401K right, cause you might be 64 and retire this year and take a big hit.

Noo, forget that. Lets get rich and lets get rich quick if we can.
Serious question

Is this post satire or sarcasm?
Hello Nathan Drake,

This post is serious post, why would it be funny. Nothing I said in there is technical wrong. Maybe subjective. But it is practical.

Do you have some comments or opinions about this post?

https://www.portfoliovisualizer.com/bac ... ion1_1=100

here is back test of $1,000,000 for the investor who invested $300 a month since 2011, TQQQQ. 10 years and a millionaire. Yeah, I am taking this bet.
MattB
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Re: er999's Bear Market Adventure

Post by MattB »

goodoboy wrote: Tue Jun 07, 2022 12:06 pm
Nathan Drake wrote: Mon Jun 06, 2022 9:03 pm
goodoboy wrote: Mon Jun 06, 2022 2:42 pm Hello hoofaman,

...

Life has to have more then work full time job for 30 years, max out 401k and then retire at 64 years old with your nest egg. And you better diverse that 401K right, cause you might be 64 and retire this year and take a big hit.

Noo, forget that. Lets get rich and lets get rich quick if we can.
Serious question

Is this post satire or sarcasm?
Hello Nathan Drake,

This post is serious post, why would it be funny. Nothing I said in there is technical wrong. Maybe subjective. But it is practical.
These posts are great. Thank you for bringing a smile to my face. :sharebeer
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nisiprius
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Re: er999's Bear Market Adventure

Post by nisiprius »

goodoboy wrote: Tue Jun 07, 2022 12:06 pm
Nathan Drake wrote: Mon Jun 06, 2022 9:03 pm
goodoboy wrote: Mon Jun 06, 2022 2:42 pm Noo, forget that. Lets get rich and lets get rich quick if we can.
Serious question

Is this post satire or sarcasm?
Hello Nathan Drake,

This post is serious post, why would it be funny....
I want to answer a language question here. goodoboy, you might not be aware of a detail of US language use. In the culture of the United States, "get rich quick" is a standard, idiomatic phrase with an ironic meaning. It is a phrase that is used to describe swindles, scams, and frauds that are promising the impossible. They are literally referred to as "get-rich-quick" schemes. When you say "let's get rich quick" it sounds as if you are joking. It sounds as if you are being ironic and saying the exact opposite of what you mean.

Here are a few illustrations of the use of the phrase from recent news stories:

"EXPERT: Beware viral 'get-rich-quick' schemes on social media"

"Coinbase Stock and the Get-Rich-Quick Mentality"

"The Surprising Reason You Shouldn't Try to Get Rich Quick in a Bear Market"

"Here's why forex trading is not a get-rich-quick scheme"
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
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David Jay
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Re: er999's Bear Market Adventure

Post by David Jay »

goodoboy wrote: Tue Jun 07, 2022 12:06 pmDo you have some comments or opinions about this post?

https://www.portfoliovisualizer.com/bac ... ion1_1=100

here is back test of $1,000,000 for the investor who invested $300 a month since 2011, TQQQQ. 10 years and a millionaire. Yeah, I am taking this bet.
Your link shows a current account value of $494,000 as of May 31 (portfolio visualizer is monthly data), not a million. It was a 1.2 million on December 31, so the fund has lost some 60% of it's value in the last 5 months.
It's not an engineering problem - Hersh Shefrin | To get the "risk premium", you really do have to take the risk - nisiprius
goodoboy
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Re: er999's Bear Market Adventure

Post by goodoboy »

David Jay wrote: Tue Jun 07, 2022 12:41 pm
goodoboy wrote: Tue Jun 07, 2022 12:06 pmDo you have some comments or opinions about this post?

https://www.portfoliovisualizer.com/bac ... ion1_1=100

here is back test of $1,000,000 for the investor who invested $300 a month since 2011, TQQQQ. 10 years and a millionaire. Yeah, I am taking this bet.
Your link shows a current account value of $494,000 as of May 31 (portfolio visualizer is monthly data), not a million. It was a 1.2 million on December 31, so the fund has lost some 60% of it's value in the last 5 months.
Hello David Jay,

$494,000 or $1.2 Million sounds AWESOME to me to have right now or in 10 years.
goodoboy
Posts: 475
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Re: er999's Bear Market Adventure

Post by goodoboy »

David Jay wrote: Tue Jun 07, 2022 12:41 pm
goodoboy wrote: Tue Jun 07, 2022 12:06 pmDo you have some comments or opinions about this post?

https://www.portfoliovisualizer.com/bac ... ion1_1=100

here is back test of $1,000,000 for the investor who invested $300 a month since 2011, TQQQQ. 10 years and a millionaire. Yeah, I am taking this bet.
Your link shows a current account value of $494,000 as of May 31 (portfolio visualizer is monthly data), not a million. It was a 1.2 million on December 31, so the fund has lost some 60% of it's value in the last 5 months.
Hello David Jay,

$494,000 or $1.2 Million sounds AWESOME to me to have right now or in 10 years.
goodoboy
Posts: 475
Joined: Sat Nov 05, 2011 8:05 pm

Re: er999's Bear Market Adventure

Post by goodoboy »

MattB wrote: Tue Jun 07, 2022 12:10 pm
goodoboy wrote: Tue Jun 07, 2022 12:06 pm
Nathan Drake wrote: Mon Jun 06, 2022 9:03 pm
goodoboy wrote: Mon Jun 06, 2022 2:42 pm Hello hoofaman,

...

Life has to have more then work full time job for 30 years, max out 401k and then retire at 64 years old with your nest egg. And you better diverse that 401K right, cause you might be 64 and retire this year and take a big hit.

Noo, forget that. Lets get rich and lets get rich quick if we can.
Serious question

Is this post satire or sarcasm?
Hello Nathan Drake,

This post is serious post, why would it be funny. Nothing I said in there is technical wrong. Maybe subjective. But it is practical.
These posts are great. Thank you for bringing a smile to my face. :sharebeer
Hello MattB,

You're welcome buddy.
goodoboy
Posts: 475
Joined: Sat Nov 05, 2011 8:05 pm

Re: er999's Bear Market Adventure

Post by goodoboy »

nisiprius wrote: Tue Jun 07, 2022 12:24 pm
goodoboy wrote: Tue Jun 07, 2022 12:06 pm
Nathan Drake wrote: Mon Jun 06, 2022 9:03 pm
goodoboy wrote: Mon Jun 06, 2022 2:42 pm Noo, forget that. Lets get rich and lets get rich quick if we can.
Serious question

Is this post satire or sarcasm?
Hello Nathan Drake,

This post is serious post, why would it be funny....
I want to answer a language question here. goodoboy, you might not be aware of a detail of US language use. In the culture of the United States, "get rich quick" is a standard, idiomatic phrase with an ironic meaning. It is a phrase that is used to describe swindles, scams, and frauds that are promising the impossible. They are literally referred to as "get-rich-quick" schemes. When you say "let's get rich quick" it sounds as if you are joking. It sounds as if you are being ironic and saying the exact opposite of what you mean.

Here are a few illustrations of the use of the phrase from recent news stories:

"EXPERT: Beware viral 'get-rich-quick' schemes on social media"

"Coinbase Stock and the Get-Rich-Quick Mentality"

"The Surprising Reason You Shouldn't Try to Get Rich Quick in a Bear Market"

"Here's why forex trading is not a get-rich-quick scheme"
Hello nisiprius,

I am very sorry for saying get rich quick. Sorry about that.

No, it will take some time with TQQQ it is a life long investment cause it may tank down 95% whenever, so I have to accept this possible risk and I accept it fully.
goodoboy
Posts: 475
Joined: Sat Nov 05, 2011 8:05 pm

Re: er999's Bear Market Adventure

Post by goodoboy »

nisiprius wrote: Tue Jun 07, 2022 12:24 pm
goodoboy wrote: Tue Jun 07, 2022 12:06 pm
Nathan Drake wrote: Mon Jun 06, 2022 9:03 pm
goodoboy wrote: Mon Jun 06, 2022 2:42 pm Noo, forget that. Lets get rich and lets get rich quick if we can.
Serious question

Is this post satire or sarcasm?
Hello Nathan Drake,

This post is serious post, why would it be funny....
I want to answer a language question here. goodoboy, you might not be aware of a detail of US language use. In the culture of the United States, "get rich quick" is a standard, idiomatic phrase with an ironic meaning. It is a phrase that is used to describe swindles, scams, and frauds that are promising the impossible. They are literally referred to as "get-rich-quick" schemes. When you say "let's get rich quick" it sounds as if you are joking. It sounds as if you are being ironic and saying the exact opposite of what you mean.

Here are a few illustrations of the use of the phrase from recent news stories:

"EXPERT: Beware viral 'get-rich-quick' schemes on social media"

"Coinbase Stock and the Get-Rich-Quick Mentality"

"The Surprising Reason You Shouldn't Try to Get Rich Quick in a Bear Market"

"Here's why forex trading is not a get-rich-quick scheme"
Hello nisiprius,

You are very smart investor, you know alot. I am still maxing out my 401K as well, TQQQ is just a risker investment.
Nathan Drake
Posts: 6234
Joined: Mon Apr 11, 2011 12:28 am

Re: er999's Bear Market Adventure

Post by Nathan Drake »

goodoboy wrote: Tue Jun 07, 2022 12:06 pm
Nathan Drake wrote: Mon Jun 06, 2022 9:03 pm
goodoboy wrote: Mon Jun 06, 2022 2:42 pm
hoofaman wrote: Mon Jun 06, 2022 1:44 pm OP, didn't you recently make a post on a 5% allocation to SPCE? Seems like you have a lot of risky bets going on

What percent of your portfolio is invested in total stock market index fund and what percent is allocated to meme stock investing and other risky bets?
Hello hoofaman,

To obtain millions quickly, it always take risky bets. Unless someone is born rich, you have to take smart calculated high risks bets at right time to get rich in the stock market business.

If you want average returns, just DCA SP 500 index forever, and even that is kinda risky depending on who you talking about.

Some of us want to get rich fast. Like 10 years fast. We work full times jobs, so we can run a business on the side. All we have the stock the market in our tool box.

Life has to have more then work full time job for 30 years, max out 401k and then retire at 64 years old with your nest egg. And you better diverse that 401K right, cause you might be 64 and retire this year and take a big hit.

Noo, forget that. Lets get rich and lets get rich quick if we can.
Serious question

Is this post satire or sarcasm?
Hello Nathan Drake,

This post is serious post, why would it be funny. Nothing I said in there is technical wrong. Maybe subjective. But it is practical.

Do you have some comments or opinions about this post?

https://www.portfoliovisualizer.com/bac ... ion1_1=100

here is back test of $1,000,000 for the investor who invested $300 a month since 2011, TQQQQ. 10 years and a millionaire. Yeah, I am taking this bet.
Now run the previous decade (2000-2010)

Trying to chase recent high performers and tripling down on it is not a strategy for building long term wealth

If you want to gamble, go to Vegas
20% VOO | 20% VXUS | 20% AVUV | 20% AVDV | 20% AVES
goodoboy
Posts: 475
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Re: er999's Bear Market Adventure

Post by goodoboy »

Nathan Drake wrote: Wed Jun 08, 2022 9:17 am
goodoboy wrote: Tue Jun 07, 2022 12:06 pm
Nathan Drake wrote: Mon Jun 06, 2022 9:03 pm
goodoboy wrote: Mon Jun 06, 2022 2:42 pm
hoofaman wrote: Mon Jun 06, 2022 1:44 pm OP, didn't you recently make a post on a 5% allocation to SPCE? Seems like you have a lot of risky bets going on

What percent of your portfolio is invested in total stock market index fund and what percent is allocated to meme stock investing and other risky bets?
Hello hoofaman,

To obtain millions quickly, it always take risky bets. Unless someone is born rich, you have to take smart calculated high risks bets at right time to get rich in the stock market business.

If you want average returns, just DCA SP 500 index forever, and even that is kinda risky depending on who you talking about.

Some of us want to get rich fast. Like 10 years fast. We work full times jobs, so we can run a business on the side. All we have the stock the market in our tool box.

Life has to have more then work full time job for 30 years, max out 401k and then retire at 64 years old with your nest egg. And you better diverse that 401K right, cause you might be 64 and retire this year and take a big hit.

Noo, forget that. Lets get rich and lets get rich quick if we can.
Serious question

Is this post satire or sarcasm?
Hello Nathan Drake,

This post is serious post, why would it be funny. Nothing I said in there is technical wrong. Maybe subjective. But it is practical.

Do you have some comments or opinions about this post?

https://www.portfoliovisualizer.com/bac ... ion1_1=100

here is back test of $1,000,000 for the investor who invested $300 a month since 2011, TQQQQ. 10 years and a millionaire. Yeah, I am taking this bet.
Now run the previous decade (2000-2010)

Trying to chase recent high performers and tripling down on it is not a strategy for building long term wealth

If you want to gamble, go to Vegas
Good Morning Nathan Drake,

Thank you for the response, i appreciate it.

Yes, I will run back test for the previous decade (2000-2010) on TQQQ.

https://www.portfoliovisualizer.com/bac ... sisResults

Question:

1. Do you know a website where I can run back test on TQQQ or QQQ for the previous decade (2000-2010)? TQQQ only be active since about 2011?

Thanks for the help and conversation.
Nathan Drake
Posts: 6234
Joined: Mon Apr 11, 2011 12:28 am

Re: er999's Bear Market Adventure

Post by Nathan Drake »

goodoboy wrote: Wed Jun 08, 2022 10:52 am
Nathan Drake wrote: Wed Jun 08, 2022 9:17 am
goodoboy wrote: Tue Jun 07, 2022 12:06 pm
Nathan Drake wrote: Mon Jun 06, 2022 9:03 pm
goodoboy wrote: Mon Jun 06, 2022 2:42 pm

Hello hoofaman,

To obtain millions quickly, it always take risky bets. Unless someone is born rich, you have to take smart calculated high risks bets at right time to get rich in the stock market business.

If you want average returns, just DCA SP 500 index forever, and even that is kinda risky depending on who you talking about.

Some of us want to get rich fast. Like 10 years fast. We work full times jobs, so we can run a business on the side. All we have the stock the market in our tool box.

Life has to have more then work full time job for 30 years, max out 401k and then retire at 64 years old with your nest egg. And you better diverse that 401K right, cause you might be 64 and retire this year and take a big hit.

Noo, forget that. Lets get rich and lets get rich quick if we can.
Serious question

Is this post satire or sarcasm?
Hello Nathan Drake,

This post is serious post, why would it be funny. Nothing I said in there is technical wrong. Maybe subjective. But it is practical.

Do you have some comments or opinions about this post?

https://www.portfoliovisualizer.com/bac ... ion1_1=100

here is back test of $1,000,000 for the investor who invested $300 a month since 2011, TQQQQ. 10 years and a millionaire. Yeah, I am taking this bet.
Now run the previous decade (2000-2010)

Trying to chase recent high performers and tripling down on it is not a strategy for building long term wealth

If you want to gamble, go to Vegas
Good Morning Nathan Drake,

Thank you for the response, i appreciate it.

Yes, I will run back test for the previous decade (2000-2010) on TQQQ.

https://www.portfoliovisualizer.com/bac ... sisResults

Question:

1. Do you know a website where I can run back test on TQQQ or QQQ for the previous decade (2000-2010)? TQQQ only be active since about 2011?

Thanks for the help and conversation.
TQQQ wasn’t in existence, but QQQ was

https://www.portfoliovisualizer.com/bac ... ion1_1=100
20% VOO | 20% VXUS | 20% AVUV | 20% AVDV | 20% AVES
User avatar
burritoLover
Posts: 4097
Joined: Sun Jul 05, 2020 12:13 pm

Re: er999's Bear Market Adventure

Post by burritoLover »

This act of laser-focusing on a strategy that has worked excessively well in the recent past and extrapolate outperformance to the future is one of the most common mistakes DIY investors make when speculating. In this case a 20% YTD downturn is used to rationalize it while ignoring the 20% PER YEAR outperformance of the last 10 years - most of which is valuation increases.

So how should you speculate? You should speculate in what you believe the market has unreasonably beaten down or has ignored - something that you believe has a lot of potential in the future. Instead, the same investors avoid these like the plague because they haven't performed for long periods in the past. QQQ was not a popular choice back in 2011 after a decade of negative returns.
MattB
Posts: 1228
Joined: Fri May 28, 2021 12:27 am

Re: er999's Bear Market Adventure

Post by MattB »

burritoLover wrote: Wed Jun 08, 2022 11:57 am This act of laser-focusing on a strategy that has worked excessively well in the recent past and extrapolate outperformance to the future is one of the most common mistakes DIY investors make when speculating. In this case a 20% YTD downturn is used to rationalize it while ignoring the 20% PER YEAR outperformance of the last 10 years - most of which is valuation increases.

So how should you speculate? You should speculate in what you believe the market has unreasonably beaten down or has ignored - something that you believe has a lot of potential in the future. Instead, the same investors avoid these like the plague because they haven't performed for long periods in the past. QQQ was not a popular choice back in 2011 after a decade of negative returns.
I'm curious if your advice would be different if the OP wanted to DCA into UPRO, the 3x-daily-leveraged S&P500 fund. Or if you would suggest OP should "speculate" into an international ETF like VXUS, because international has performed poorly for the past decade.
goodoboy
Posts: 475
Joined: Sat Nov 05, 2011 8:05 pm

Re: er999's Bear Market Adventure

Post by goodoboy »

Nathan Drake wrote: Wed Jun 08, 2022 11:34 am
goodoboy wrote: Wed Jun 08, 2022 10:52 am
Nathan Drake wrote: Wed Jun 08, 2022 9:17 am
goodoboy wrote: Tue Jun 07, 2022 12:06 pm
Nathan Drake wrote: Mon Jun 06, 2022 9:03 pm

Serious question

Is this post satire or sarcasm?
Hello Nathan Drake,

This post is serious post, why would it be funny. Nothing I said in there is technical wrong. Maybe subjective. But it is practical.

Do you have some comments or opinions about this post?

https://www.portfoliovisualizer.com/bac ... ion1_1=100

here is back test of $1,000,000 for the investor who invested $300 a month since 2011, TQQQQ. 10 years and a millionaire. Yeah, I am taking this bet.
Now run the previous decade (2000-2010)

Trying to chase recent high performers and tripling down on it is not a strategy for building long term wealth

If you want to gamble, go to Vegas
Good Morning Nathan Drake,

Thank you for the response, i appreciate it.

Yes, I will run back test for the previous decade (2000-2010) on TQQQ.

https://www.portfoliovisualizer.com/bac ... sisResults

Question:

1. Do you know a website where I can run back test on TQQQ or QQQ for the previous decade (2000-2010)? TQQQ only be active since about 2011?

Thanks for the help and conversation.
TQQQ wasn’t in existence, but QQQ was

https://www.portfoliovisualizer.com/bac ... ion1_1=100
Hello Nathan Drake

Thank you for responding. I understand what you mean. The chart tells the story. If invested, be prepared to wait for X to XX years for reward.
User avatar
burritoLover
Posts: 4097
Joined: Sun Jul 05, 2020 12:13 pm

Re: er999's Bear Market Adventure

Post by burritoLover »

MattB wrote: Wed Jun 08, 2022 12:27 pm
burritoLover wrote: Wed Jun 08, 2022 11:57 am This act of laser-focusing on a strategy that has worked excessively well in the recent past and extrapolate outperformance to the future is one of the most common mistakes DIY investors make when speculating. In this case a 20% YTD downturn is used to rationalize it while ignoring the 20% PER YEAR outperformance of the last 10 years - most of which is valuation increases.

So how should you speculate? You should speculate in what you believe the market has unreasonably beaten down or has ignored - something that you believe has a lot of potential in the future. Instead, the same investors avoid these like the plague because they haven't performed for long periods in the past. QQQ was not a popular choice back in 2011 after a decade of negative returns.
I'm curious if your advice would be different if the OP wanted to DCA into UPRO, the 3x-daily-leveraged S&P500 fund. Or if you would suggest OP should "speculate" into an international ETF like VXUS, because international has performed poorly for the past decade.
So you place an intl total stock market index on the same risk level as 3x leveraged Nasdaq 100 position?
Nathan Drake
Posts: 6234
Joined: Mon Apr 11, 2011 12:28 am

Re: er999's Bear Market Adventure

Post by Nathan Drake »

goodoboy wrote: Wed Jun 08, 2022 12:40 pm
Nathan Drake wrote: Wed Jun 08, 2022 11:34 am
goodoboy wrote: Wed Jun 08, 2022 10:52 am
Nathan Drake wrote: Wed Jun 08, 2022 9:17 am
goodoboy wrote: Tue Jun 07, 2022 12:06 pm
Hello Nathan Drake,

This post is serious post, why would it be funny. Nothing I said in there is technical wrong. Maybe subjective. But it is practical.

Do you have some comments or opinions about this post?

https://www.portfoliovisualizer.com/bac ... ion1_1=100

here is back test of $1,000,000 for the investor who invested $300 a month since 2011, TQQQQ. 10 years and a millionaire. Yeah, I am taking this bet.
Now run the previous decade (2000-2010)

Trying to chase recent high performers and tripling down on it is not a strategy for building long term wealth

If you want to gamble, go to Vegas
Good Morning Nathan Drake,

Thank you for the response, i appreciate it.

Yes, I will run back test for the previous decade (2000-2010) on TQQQ.

https://www.portfoliovisualizer.com/bac ... sisResults

Question:

1. Do you know a website where I can run back test on TQQQ or QQQ for the previous decade (2000-2010)? TQQQ only be active since about 2011?

Thanks for the help and conversation.
TQQQ wasn’t in existence, but QQQ was

https://www.portfoliovisualizer.com/bac ... ion1_1=100
Hello Nathan Drake

Thank you for responding. I understand what you mean. The chart tells the story. If invested, be prepared to wait for X to XX years for reward.
Or in the case of something highly leveraged, there’s risk of almost complete wipeout

Slow and steady Boglehead investing will make you rich. If your savings rate is high, it will even make you rich quickly.

But if you have a high savings rate and get greedy by concentrating into a highly leveraged fund, there is meaningful risk that you invest for a decade and you have less than what you saved.

What is the better scenario? A boring 6-8% return but permanence to the longevity of the portfolio, or buying a lottery ticket in TQQQ with a real risk of going belly up?
20% VOO | 20% VXUS | 20% AVUV | 20% AVDV | 20% AVES
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