Are Leveraged ETFs A Good Investment?

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Are Leveraged ETFs Good Investments?
In today's video we look at leveraged ETFs to try and determine if they are a viable long-term investment strategy. We'll do this by going over how leveraged ETFs work, their pros and cons relative to their unleveraged counterparts, and what the data suggests their historical performance might have looked like.

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[keenheat]

ndx 10 year cumulative gain 683% (annualized 22.8%), Tqqq over same period 12, 228% (annualized 62.9%), amazon stock rose about 71% in 2020, FNGU (triple leveraged fang etf) in the same period rose 352%, if you bought during the march dip then it's 905% in 1 year. 100k -> 1 mil in one year. There is also a triple leveraged tesla only etf 3LTS, given how much tesla has rose. I don't think I need to spell out how much it gain over the same period. I'm not saying bet the farm on it, but the risk/reward ratio is certainly looking favorable for a small speculative position. Especially if you know how to use trailing stop loss to buy and sell instead of just holding it forever like some one is pointing a gun to your head.

[cato]

I use them, but sparingly based on the information provided. I did buy a 2x etf that was discounted 99% in March last year. It has since doubled in value so I’m sticking with it.

[millenialmusings]

What happens if I invest $100 in a 4x leveraged ETF and the underlying drops by 40%? Is my position liquidated and closed? Or does it go into negative but position is kept open?

[Je.rone_]

I've used leverage etfs in the past, I usually stay away now, mostly because that suits my personality

[BIGGERmac]

Thanks for the video. I’ve been wondering about this topic for a while. It is amazing what a difference the expense ratios make. I do wonder how much DCA could mitigate start date sensitivity.

[flurinjenal]

In case the leveraged ETF crashes to zero, do you have to pay extra for dept or did you "just" lose all your money? What is the mechanism there?

[-You-Tube-]

I Bought TQQQ around the time of this video, Currently up 80%, Not complaining or selling.

[pasiojala]

You have a weighted die. 2 and 5 should be on opposite sides (just like 6 is paired with 1, and 3 with 4).

[mikearroyo]

Can you do a video on SQQQ? That would be awesome!😎

[MSteitzify]

They are viable long term. Just have to do some risk management. I currently use a trailing stop loss order of 15%, DCA back into it and move my full amount back in after the price crosses above the 50 day EMA.

[UcanKeepYourMoney]

Fantastic video man, answered so many of the questions I had around this.

[favjr]

This only really works if you pair them with other leveraged ETFs or assets that are negatively correlated and uncorrelated, and stick with the most liquid of these funds.

[lucasatilano]

The whole calculation changes completely when you average cost into the leveraged ETFs

[lifeyang]

Thanks. Very helpful info in this video.

[tigerhawk]

This is the best video I've seen on the topic, specifically comparing VOO to SSO ROI adjusted. Thanks.

[andremadureira]

If combined with other ETFs, leveraged ETFs might be reasonable buy and hold strategy. Eg: 20% TMF 80% VTI which would have 10% max drawdown and 7% std dev

[nikosalpha]

very very useful. thank you and congratulations for the channel

[noveltyrobot]

Off topic question but I'm leaving it on your latest video so that you can see it.

My employer provides a Roth 401(k) with a 5% match. I'm putting 15% of my income with a plan to raise it to 20% with my next raise. Question, rather than do that, is there any sense in opening my own Roth IRA that I know I can max out and only get the match from my employer? Possibly go to 6 or 7% with the 401? Or should I just put everything in the 401 since they'd both be Roth anyway? Thanks...

[Putseller]

I have been trading the TNA/TZA pair for 10 years now with great results! They are my largest position and are the main reason (along with zero commission) I was able to quit my full time job. The key is most people play just one side when in fact you have to be like the Rothchilds and play both sides. If you can get the swing of it you can make consistent income

[andremadureira]

I wonder why there are no leveraged ETFs with annual or monthly reset.