Risks of Going All-In on Leveraged ETFs

Question from Patreon member: If we are so bullish on Tesla, why not just buy TSLL (leveraged Tesla stock)?
Recording date: August 6, 2023
#iaclips #investanswers #tsll #teslastock #tesla #leveragedteslastock

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[hge]

I don't understand, if you DCA in a leverage ETF and buy more at the bottom what's the problem? I've been doing that with TQQQ and it has been giving me some of the best returns in my portfolio.

[peterzz]

At most I seen TSLL go down 20% in a day and on a year from now basis tsll has outperformed tsla by 40% not exactly a 2x, but even taking all the big hits you would still be up

[nirajpatil]

Last 2 yr NVDL returns: 20 times
NVDA: only 8 times

In long term, if the stock grows, leveraged ETF does too. If it is constant, ETF underperforms.

In this example, TSLA had dropped and hence the gap b/w TSLA & TSLL.

Kindly let me know if I'm wrong. I'm thinking of investing $75K.

[quannhacthienban]

As long as TSLA is good TSLL is good too. If TSLA is good for long term why not TSLL? Am I wrong?

[guyhickson]

James if we were to sell cash secured puts on the tsll leveraged play would the option protect from the daily reset loss?

[franckiewicz]

Is it just twice the upside and twice the downside? Or 3 times the upside and 3X the down depending on the leverage?

[HypertronicTeddy]

What's the downside of trading leveraged ETFs? Even if we get assigned, it's tied to a stock we don't mind owning, right? For example, I hold TSLA in my portfolio, but I don't want to play options on it because I either don't want it called away or I don't have the budget to sell puts. TSLR seems like a good alternative for weekly put options. I don't see much downside here—am I overlooking something? I’d appreciate your thoughts on this. :)

[lerainking]

Thank you for confirming my suspicion on these leveraged ETFs. Your lists of reasons along with your brief and concise explanation was very helpful. These ETFs might be useful for short term or swing traders but not for longer term investors.

[tylertruski]

Nah nothing wrong with leveraged stocks.