SPUU
Direxion Daily S&P 500® Bull 2X Shares
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Can anyone explain why SSO and SPUU produce their (similar) gains in totally different ways?
Why not use Leverage ETFs over a long term horizon?
Would it be crazy to assume the next 40 year returns on say the S&P 500 will be the same as the past 40 years?
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The real answer is buy more SPUU or QLD. https://www.ddnum.com/articles/leveragedETFs.php (Or tqqq if you have balls of steel)
This is not how portfolio performance is measured. Useless numbers as they're not adjusted for risk in any way. I can also outperform the market easily: just 2x leverage spy like SPUU.
I just recently reduced my exposure on some volatile ass stocks and put more money on the dips into QLD and SPUU. Just double the indexes. Personally, I needed to reduce my risk as I maxed mine out. A portion of my portfolio I like to just set and forget - and the decay in the doubles is no where near the decay of triple leverage positions. I’m just 1 decade of experience in the market though but my portfolio has done very well!
I fullported all my retirement accounts into SPUU on 4/7. Up 70% since then on those.
I’ve begun defaulting to SPUU or QLD as my go to ticker. They are 2x SPY or 2x QQQ. I like LETFs a lot but I’ve had issues with individual stocks getting stuck or killed (NVDX, MSTU) but as far as I can see back tested SPY continues to rise and drawdowns are very short , even in COVID/April situations. So you get the benefits of leverage and the benefits of SPY in one
Check out this book. It was written in 2010 and is backed by academic research. The main point is that leverage when you're young may be appropriate and may actually reduce risk since it provides more diversification across time. # Lifecycle Investing: A New, Safe, and Audacious Way to Improve the Performance of Your Retirement Portfolio Ian Ayres and Barry Nalebuff In my experience, nakedly investing in leveraged index ETFs works until it doesn't. That is, you can have tremendous gains, but then give them all back. You need to have some portion of the portfolio that is a hedge and rebalance a couple times a year. Hedges are long treasuries (ZROZ), gold (GLDM) and potentially managed futures (CTA). Play around with different mixes on testfol.io. Really look closely at the 1970s or 2007/8 and consider your total leverage (amount of UPRO or SPUU) in the mix. It isn't going to be hard to run a leveraged portfolio in times like today. But imagine things going down and staying down for five years or longer. That will happen. It's guaranteed over your investing lifespan. Multiple times. Whatever portfolio you run, you need to believe in it strongly enough by doing the work so that you stick with it when the shit hits the fan. Which it will.
Since inception of SPUU (April, 2014) it is up 461%. From the same date, SPY is up 241% 🤷🏻♂️
SPUU does twice the business
Gotta remember to put my phone on silent on Monday as I could only dodge Fidelity WM for so long, finally had to cave and tell them I'll speak when them on 8/4. Don't want to be harassed with my 40% SPUU and 2% SPY LEAPs
They dont really teach you that stuff at school, this is just wallstreet leverage jargon. TLDR, only diversified risks are compensated. With leverage, you can take on more risk. It costs the (EFFR + ~0.5%) × 1.1 for every point of leverage, plus the higher expense ratios for the funds. For example, SSO or SPUU (2x SPY) cost like ~5-5.25% per year on leverage costs, plus their expense ratios. Historically they have outperformed unlevered 1x (when simulated back to 1885). Lots of sub periods where they suck, like the great depression, dot com, GFC, etc. Otherwise, they tend to do great like post WWII, depression recovery, the 80s/90s, 2009 onwards
It isnt worth it, because you bring no information thats different from the market. You cant "train to be a trader". Vast majority fail, and those who do are niche super smart algo quants. If you need to catch up to some future spending goal, then unfortunately your only way to dial up compensated risk past 100% is leverage, which comes with costs and danger for an emotional person. For example, instead of being 100% VT, you may need to be like 45% SPUU (2x SPY) / 55% ex-US, for 145% equity exposure, something akin to that. Or utilize short box spreads to buy more stable leveraged instruments like RSSB (100/100 VT/IEF) but 1.5x exposure for 300% exposures to VT and IEF.
If you bought something like SPUU or SPXL/SOXL at the bottom? Yeah, sell that and rebalance to something like 1x leverage like VOO. If you're all VOO/VTI/VT? 22% cash is probably too much unless you're retired.
$SPUU is up 9.75% since May 15.
You are completely and totally wrong QLD and SPUU have both outperformed qqq and spy over the long run
Sold 1x S&P 500 ETFs and replaced them with 2x and 3x leveraged ones hoping to ride on the recovery. SPUU, UPRO
That’s the opposite of how it works… individual stocks move more and SPY moves less because it’s averaging across 500 companies, not 100 (hence the name S&P 500). But regardless, that’s not even what they were talking about because SPY/SPX aren’t leveraged. ETFs like SPUU, SSO, SPYQ, SPXL, UPRO are leveraged ETFs that track the S&P 500
Maybe you should buy ETF and hold.. like IYW, QLD(2x qqq), FBGRX, SPUU (2x s&p500) If you want to get crazy TQQQ, TECL, FNGU I personally have 220k in NVDL (2x NVDA) im ready to make some MONEY and 130k of TECL TQQQ FNGU and like 6k of PTIR and Sounw I just invest not trade. TQQQ TECL FNGU can crash very hard, and take forever to recover.. so if you do get these either get small amount or realize, you might have to make a judgement call if things are down 60% how far things will go, normal stocks you just hold and sell years later for more usually, 3x leveraged you have to make a call or own a hedge
35% for SPUU vs 28% for SPY. Even using a very specific time to try to prove a point, still better. And no one should be buying these very high risk ETFs for 2 year time period. Yes they will significantly underperform in crashes. But my original point was that over 5 years, with 2 drops of 15% and 20+%, it's still greatly over performing despite people saying "don't hold long term". But the evidence doesn't support that. Of course don't buy these if you need the funds in 18 months... Or even the next 5 years for that matter.
The 900% is interesting, however, you do not count your entire portfolio, since as you said, you do not risk more than 5-8%. SPUU has gone up about 200% if you bought 2 years ago. Because it is historically quite safe to full port into that (just as full porting into VOO), you would have made 4000% compared to the 900% you made on 5% of your portfolio (if comparing the absolute gain, and assuming the rest of your portfolio made 0%). So the question is really, did the other 95% of your portfolio go up 190% in the time that your 5% went up 900% or not. I am not trying to trash your strategy or anything, anything that makes more money than inflation is a win in my book. Just giving an example that there are other possibilities as well. I would say for someone who can't beat S&P 500 the better option is to just DCA into SPUU. Also, your example about 2x downward and upward is correct regarding SPUU compared to S&P 500, but not fully correct regarding the underlying stock. This is because the S&P 500 also has a quartery rebalance, which throws some wrenches into the equation.
I literally said I *wouldn’t* advise going full port into anything. I put 5-8% of my portfolio into leaps. I won’t lose more than 5-8% of my portfolio in an unrecoverable way if there’s a disaster scenario where market doesn’t recover for over a year. Backtesting does nothing because past performance doesn’t guarantee future returns, but my returns on this have been about 900% aggregate during 2021, latter half of 2023, and 2024 to date. SPUU sounds great. Gonna buy and hold more of that. Maybe even buy some leaps on it.
The difference with SPUU is that it has always outperformed VOO long term nor does it need any baby sitting. The historical optimal leverage when not counting any fees is around 3x on S&P 500. However, due to increased fees it is between 2x and 2.5x. If you want to reduce drawdowns it is enough to get in/out at MA200 1d chart crossing, at the expense of some profit (still beats buying and holding S&P 500). So - have you actually backtested your options strategy?
Fair enough, SPUU’s good too. Leveraged ETFs decay over time too though in a way. You’ll always lose more on 2x downward moves than you gain back in equivalent 2x upward moves. SPY calls need so little movement from SPY to end up with 20-40% profit that I prefer betting that that’ll happen.
What's the yearly return compared to SPUU?
Might as well just do SPUU. Also, if you buy leaps in a bear or sideways market you are guaranteed to lose all of them.
Historically the optimal leverage for S&P 500 is not 1x. It is around 2.5-3x. Due to the fund fees being higher with higher leverage the real world optimal is lower. Basically buying SPUU is better, and has always been over a long period of time. The crashes just hit harder and takes longer to recover, but the yearly CAGR still always beats. To reduce drawdowns at the expense of slightly reduced long term performance it is enough to buy/sell when the price crosses the daily MA200. There is a research paper on this subject...
SPUU is a better idea, just sell and rebuy on 100 or 200 day MA crossing the price to reduce drawdown. Even just holding 1x leverage has never been optimal for S&P 500 in the long run.
If you're that bullish, you could also play margin. If you sell SPY and buy SPUU or UPRO in down markets would be one way to both tax loss harvest and spur gains (and losses).
Feel like SPUU is about to come down…..
For the past 10 years, VOO has had an annual return of 13%. SPUU has had an annual return of 20.6%. In case of SPUU, if you used a simple MA strategy, e.g. 200 MA cross to sell and 100 MA cross to buy back in, the returns are even more impressive.
Ah yes, because VOO and SPUU give you 33% returns a year... Where can I buy call options for VOO?
"Also, put at least 75% of the money you ever transfer into your account in VOO or SPUU" This advice is a good as it is boring, which is why so many people try the sexier approaches, and it's why one-page diet books that say "eat less, eat healthier, and exercise more" don't sell.
I hope that's not your only account. If it is, then you're truly regarded. If you get easily addicted to things like gambling, coffee, whatever, then just don't touch options. Unless you are doing it for hedging like selling covered calls on your existing positions... Also, put at least 75% of the money you ever transfer into your account in VOO or SPUU, and use the rest for gambling if you must. So for every 4$ you transfer into the account, immediately put 3$ into the index and the other 1$ use for gambling/whatever. No exceptions. Just this rule alone will still accumulate you money, even if you do terribly on the other 25%. Good luck :)
I recently switched from using SSO to SPUU. Lower traded volume but the expense ratio is lower. SPUU=.61% while SSO=.91%. I just plotted them on top of eachother and the returns are essentially identical.
Why is TQQQ and SPUU not more popular with how popular the S&P 500 and QQQ are for long term holds?
I think over the next 2 months, there is a bigger chance for the market to got down than up, so I think am hesitant to recommend any stock right now. But after the market churn, if I were in your shoes, I would probably grab some NVDL QLD or SPUU. I will say, my risk tolerance is higher than most so QQQ is not a bad idea but it will be a few years (at least) to get back to even after a 38% draw down
That's what I'm uncertain on. Do you know how much? Seems stupid if they borrow at higher costs than free market? OP posted some of their funds in earlier posts like FNDC that have a 0.4% expense ratio. And a leveraged fund like SPUU has expense ratio of 0.6% and met their initial target of 2x leverage. Greater LETFs like 3x tend to have higher expense ratios though so maybe it was OPs plan to go to higher leverage and that is where the main benefit is coming in? Again trying to get clarification why she abandoned the Kelly Criterion Optimal Portfolio.
Leverage ETFs, TQQQ, SOXL, SPUU. Or LEAP options. Go at least 1 year + for leaps
15% of my portfolio is exposed to leveraged ETFs. * 5% in 3x Nasdaq - TQQQ * 10% in 2x S&P500 - SPUU I entered this position in January as it became clear the AI run up was going to keep going, and I felt 2024 would have significant positive returns. I plan on selling TQQQ when I feel the market is getting too frothy. It’s entirely speculative. I plan on holding the 10% SPUU as I like the exposure and am optimistic that the small amount of leverage is sufficient long term
If you have some strategy and exit criteria, TQQQ can be good for medium term plays. I’ve been super bullish on the year and am holding 10% in TQQQ and another 15% in SPUU (2x SPY). I bought in January and TQQQ is up 60%. If I feel my sentiment changes or I become less certain on the market I will switch out of TQQQ and put it back into VOO or QQQ. There’s also some analysis done showing something like mild leverage (1.5x-2x) is very sustainable long term. I’m thinking of putting more into SPUU, especially if there’s some rough red days.
At a young age put some into SPUU which is 2X the S&P and other leveraged ETF's as long as you read their terms and fees closely
TQQQ, SPUU, leveraged ETFs on index funds in general. SOXL is also a good one if you believe in chips. NVDA looms a bit over extended, but if you like the company try NVDL, 2x long nvda ETF. If you are very aggressive, you can wait for a 5-8% market correction and then load up on LEAPS expiring 2025/26
Choose a risk tolerance level: SP500: VOO for 1x SPUU for 2x UPRO for 3X NASDAQ100: QQQM for 1x QLD for 2x TQQQ for 3x NYSE FANG+: FNGS for 1x FNGO for 2x FNGU for 3x
Leveraged index funds, TQQQ SPUU etc
I'd be a little cautious on BUG. Lots of the listed companies are in the 'post funding hangover ' and if the institutions decide to change their valuation formulas it could see a lot of volatility. In OPs position I'd think about blending VTI and SPUU if they have a mid term bull case in the US index
Traditional and Roth are both not taxed on dividends or capital gains. So there's no difference there. High yield bonds are lower risk and returns on average than equities. The others are no higher than broad index funds and generally lower return in aggregate due to charging higher fees. If you want to maximize growth and not very concerned with risk, you should look into using leverage. Something like SSO/SPUU is an easy way and takes care of rebalancing for you. Options/futures are another way. Of course, you have to be careful. Leverage introduces path dependence (more volatility drag), potential for total loss, and requires you to know how to size your position well, not to mention effort spent managing cash and rebalancing if you use derivatives yourself.
SPUU is exactly what you are looking for. 2x leverage S&P500 ETF
I highly advise buying ETFs. That’s a lot of individual stocks to try to keep track of. VOO, VTI, VT & VUG are pretty easy buys. I’m 23 and have a lot of time so I also utilize a couple leveraged ETFS, such as SPUU, FNGO & TQQQ
I have LETFS as about 5% of my individual portfolio. I am very bullish on the year and wanted additional exposure to the Mag 7. So I picked up: * 3% in SPUU (2x) — +14% since Jan * 2% in TQQQ (3x) — +16.5% since Jan However. Like others have commented, in the long term they lose out to QQQ because of inter-day volatility. LETFs can and do outperform indexes across short time frames in bull markets. Since my hypothesis is that we will have another few run ups this year, I’m staying in to capitalize on those gains. But it’s a short term gamble and I **HAVE** to profit-take at some point. Because it **WILL** drop below QQQ and start underperforming. If I start to feel less optimistic as an investor I’ll pull out, or if it hits equilibrium with QQQ I’ll pull out. This limits my maximum downside to be exactly even with QQQ.
Because this makes way more money? As per my FAQs in my guide: \- What about using Leveraged ETFs (ex: SPUU)? Those have high management fees, sometimes have too much leverage (ex: UPRO), will not let you diversify globally as effectively, there are no smart-beta options and they rebalance daily (instead of using the 1.8-2.2 leverage bands I recommend). IMO, it's better to rebalance a little less frequently than daily (this is what using bands accomplishes).
35% of my portfolio is SPUU. Why not slightly leverage that diversification?
My stupid idea is splitting 25% of my investments between 2x and 3x leveraged ETFs SPUU and TQQQ. Bullish on the year and want exposure to high growth. So far it’s been good. But I’m ready to eat my words if we turn around.
Leveraged ETFs can absolutely work for long-term investments. Many people made millions this way. But if you're unlucky to have a large sum invested at a bad time your holding can go down like 90%. I've made a lot of money with leveraged ETFs, and then I invested into LABU (3x biotech) after it lost like 30%+, so I invested a lot, but it kept going down and now my LABU holding is like 85% down. I hold it in the hopes it will one day recover... So I mean with leveraged ETFs it can work both ways. If you decide to go with a leveraged ETF I'd recommend looking into broad market ETFs, like SPUU (2x S&P) or UPRO (3x S&P), this way you will less depend on a situation in some specific area like biotech or semiconductors or energy. Keep in mind S&P 500 is at an all-time high now, so right now is probably not a good time to invest in a leveraged S&P 500 ETF.
I am no longer in a position to give financial advice but I think learning technical analysis dramatically increases one's ability to trade/invest. I used be a licensed Series 3-futures/options on futures broker -I always just paid attention to stock market futures. I had to do my research before becoming a semi decent investor for the past year and a half. It doesn't matter what the asset is, if I see the 14 day RSI at 8, I know that stock has literally tanked and 99.9% of the time will go up. Fortunately, I'm with Schwab,which offers contradictory analysis but it makes it easier for me to determine if something is a buy or sell with basic attention to a very basic chart. I just need to to know a few things:the 14 day RSI, volume, and slow stochastic oscillator. Schwab lists all of those. I know if the 14 day RSI is in the 30s it's starting to become oversold and I can feel comfortable increasing my position(while bearing in mind it could become more oversold), and if it's in the 70s it's overbought and probably due to correct. However it can go higher, the 14 day RSI could get to the 80s,potentially causing me to miss the top. I have yet to master knowledge, but I know I've made excellent returns by making my decisions on these various types of analysis. When my portfolio drops 20%+, its my fault for ignoring the technicals and assuming I can put up with volatility. Again, with cefs its fairly easy when to trim because they move back and forth the same ranges-the same ranges for many dividend stocks besides cefs You will rarely get a 100% return but it possible to make 25% to 40%+ and higher occassionally by avoiding drawdowns. For me, I endure drawdowns,assuming I need the income-thats the greed in me that makes me ignore technical analysis. Typically, we all know when its time to sell. I find when I dont want to sell is the time to sell and when I dont want to buy,it could be tine to buy. This year,my income portfolio will be less income focused if its time to sell,even if it means forfeiting the dividend/distribution/etn interest, I can still withdraw short term capital gains or margin. Now I dont care about the latest fads. I have an income focused portfolio with capital appreciation and income as top priorities,so I trade mainly leveraged Etracs income etns and closed end funds. Now, at one point in the year I was up 30-35% excluding distributions/etn interest equivalent to a 15% portfolio yield with a portfolio of 80% Etracs income etns and about 20% cefs,but I got too comfortable and after a 20% drawdown transitioned back to 80% cefs 20% Etracs etns. I also regularly hold 3x leveraged index funds TQQQ and SPXL/UPRO and 2x leveraged index funds QLD and SSO/SPUU for 1 to 3 weeks at a time,but failed to do so during the Nov and Dec 2023 rally. I wanted to see the market come down first. While as buy and holds most cefs underperform the market, when trading them, one can capture an 18 to 25% capital gain while collecting monthly distributions equivalent to a 15% to 20% yield. Every now then 40% to 100% capital gain. The leveraged Etracs income etns offer 30%-100% in capital gains potential but this year I certainly learned the prospectus wasn't kidding when it said Etracs etns weren't buy and holds. My portfolio would've dropped 40% and then would've finished the year +30% to +35% 2 months later after an 18.1% withdrawal rate for the year. I have a major rule,once a 20% drawdown from the high is made,positions are reduced and a cash position is increased before I strategize. I'm just not willing to drop 40%+ even if it means I have smaller gains for the year. I could have an awesome return one good month bringing my one year performance up an additional 20% and the next month the return could be negative It's one thing to know the technicals and another to ignore them,attempting to maintain a buy and hold portfolio combined with trading, assuming you'll be able to put up with volatility. One thing I like about cefs,besides the fact they tend to trade in predictable ranges, I get a good idea of entry and exit points. This is much easier and more calculating than investing in the latest fad. Quite frankly, I did better Oct 20,2022 to Jan 20,2023 -up 25% in 3 months then how 2023 actually ended:roughly +15%. So I dont claim to be a guru but I do know I've developed a strategy that works as long as you don't let greed or assumptions prevent you from selling when it's time to.
I bought NVDA, a leveraged SPX long, and TSM when the market was still dropping like rock [15 days ago](https://old.reddit.com/r/stocks/comments/17g0upg/rstocks_daily_discussion_wednesday_oct_25_2023/k6fs1xy/). I made the mistake of exiting SPUU and shaving my NVDA trading position late last week because I wasn't convinced that we were in an actual rally instead of a mean reversion rally. There are no guarantees, but the S&P finally barely punched through the psychological/previous resistance level of 4400, which makes me feel safer that this rally is real. I'm closing my eyes and holding NVDA through earnings and the wild after hours swings. It's hard to imagine that they can beat last quarter's mind-boggling revenue increases and I expect them to announce that they are supply constrained, which will be good for the margins of companies like TSM and ASML (I also have an ASML position). That means there could be a sell-on-the-news pullback during the earnings call. As expensive as NVDA's products are, energy expenses matter more over the long haul than upfront prices and NVDA still has the lead. Most of my portfolio is ten buy-and-hold stocks and index funds though, and NVDA has long been a part of that, along with a treasury barbell that used to be 40%, but that is now significantly less. I pretend that my buy-and-hold portfolio doesn't exist because I've owned many stocks that turned out to be ten-baggers, but I would sell them and miss big rallies. For buy-and-hold stocks I remind myself that cash is a depreciating asset and that owning shares is more important than owning cash, and market pullbacks, corrections, and crashes don't hurt my share percentages one bit so long as a company doesn't start selling its shares. Semiconductors are historically cyclical and we are in a dangerous time in that cycle, but the wild swings won't mask a secular uptrend.
I'm really excited about where the market is at, and I'm happy to go contrarian. Geopolitics aside, the odds that this is a look-out-below situation are slight. The S&P is at 4188, and it could go as low as 4120, but I just spent the last of my cash in the last hour, looking for a rally back to moving averages overhead, back to 4340 or so. Investors typically overreact to earnings, and the indices have been behaving rationally, sampling prices that span all of the moving averages down to the 400 day. A year-end rally is still very possible. Wall Street can go from ST bear to ST bull overnight. I even bought 2x leveraged SPUU as a short-term holding, though I usually avoid leveraged funds like the plague. I also picked up beaten-down NVDA and TSM. TSM has a relatively small AI vertical, but they are best in class, and they will have a large AI vertical several years from now. Their earnings were just fine, especially considering that markets are crap in Asia and Europe. I want to own NVDA whenever they announce earnings/revenue, and waiting till the night before means moving in after fund managers make their moves. I love to buy and add when things look bad, and that is now. The KRE small bank index has been creeping down and is now within 6% of its earlier peak bank-failure panic lows. The Fed can talk tough, but if the broader market starts going lower, small bank stocks will bleed out, which ties Powell's hands. If Fed Speak changes a little and people see the end of rate hikes, the market will move up long before any official statement. I'm going to close my eyes until the next rally, and keep moving new income into the market and invest through lows.
its just how the total return swaps in the etfs are structured. in general you can structure the total return swap to reset cash flows at any frequency you want. generally with equity swaps its quarterly to align with the expiry of the stock index futures, but could be monthly, or annually, or bullet (no resets) or whatever frequency you want. it just looks like SPUU has a greater reset frequency that SSO, so there are more cash flows to be distributed out to investors. Also it looks like SPUU holds some single names at double their weight (the big ones, apple, mstf, amzn, nvida, goog, tesla) so those throw off some additional dividends which have to be distributed while SSO holds only index swaps.
Interesting. If you look at the holdings of each ETF, SSO achieves exposure through swaps. SPUU appears to do so though levered holdings of the individual stocks. SSO appears to be more tax efficient, but I don’t know if there are downsides to their method.
If you’re looking to increase your return id look at ETFS like SMH/SOXX (semis) more volatile but do about 17% annualized the last 10 years. Feeling more risky? Implement a 5% SPUU/SPXL holding which you take profits on every quarter. More risky TQQQ. In all fairness 90% of my portfolio is QQQ/SPY/SOXX mix. 5% QLD which I take profits on quarterly, 5% “trading” money which never outperforms the other buckets but it’s controlled and fun. One man’s opinion
So, when I was 20, I was making some money (turns out I’m REALLY good at certain things) and my boss’s boss pulled me aside one day and said: “Crazy, you’re making some good money. At your age, you should start investing that money for retirement now. If you look at the numbers of even a small investment today, it will be a retirement in thirty years. AND if you lose it all, you still have a long time to make it back, so take some risks on companies you think will grow.” Well, back in those days, you looked up stock prices in the newspaper and ETFs or index funds hadn’t been invented yet. I invested everything into Microsoft, which worked out well because they came out with something called “windows” some time after that. At your age and apparent success. That $20k will be NOTHING to you in ten years. But you are also just starting out - you might want to settle down and buy a house. Are you investing this conservatively because you are saving up for a down payment on a house? If yes, spread it evenly between qqq and spy and maybe something tied to the DOW. Or are you certain that you want to lock this money away until you are old and grey (gods willing)? If yes, put it into a leveraged index fund like QLD/TQQQ and/or SPUU. There is literally ZERO probability that in 30 years the S&P or the NASDAQ will be down from todays values. Fuck, there is ZERO probability that it will be less than 10x today’s values in 30 years. At your age, the biggest risk I see is the need for a down payment on your first house, which can be very difficult to put together, and investing for the long term might not be the greatest choice if you’re planning on doing that. Once you have established yourself with a home and have visible career growth might be a better time for leveraged investments. Besides that, you’re investing in ducking treasuries. If you talk to some financial people, and you have enough put away to do that, they can probably recommend better investments that’ll have better returns.
I feel like this would be a lot more useful if you used actual numbers from existing leveraged ETFs, and compared various timeframes. Like, if x2 is optimal, let's grab SSO or SPUU and compare to SPY in random time segments of a few years and see if you always come ahead and basically everyone not investing in x2 is a sucker.
I would compare apples to apples and say SPUU will beat VOO both in gains and in losses.
So does the interest rate "cost" effect daily tracking then? I'm just confused how to find what the true cost of a LETF is. Like, take SSO and SPUU. Besides expense ratio and spread, is there some other difference in "cost"? I guess it's important to note that I don't actually know where the expense ratio of a LETF is paid. I don't understand all the ins and outs.
Thanks for the source. It's important to note that they used an expense ratio of 0.95% for that figure (in their words "a typical value for recent leveraged ETFs" which would have presumably been in 2009), while these days you can find leveraged ETFs with significantly lower expense ratios (e.g. SPUU at 0.63% net).
So, be really careful with SPUU ?
HUT8…EMBK…USOI….U….PI…SPUU thank me later
Sure let’s do it. John and Jessica have $50,000 each. In June of 2022 John buys a house for $250,000 (20% down, 30yr at 5%). In June of 2022 Jessica buys a fund that will return 21% per year (average SP500 returns since inception stands at 10.5%). In June of 2032 both cash out of their respective investments. John sells his house for $500,000 - double the initial value. He still owes the bank $203,000 so he walks away with $297,000 (if we assume John rented the place with a cash flow of exactly 0). Less the initial investment, his total profit is $247,000. If John lived in the house and didn’t rent, he doesn’t owe any taxes, but he also paid $161,000 over the course of those 10 years to live in the house and (just the loan, not considering property taxes) plus the $50,000 down. This brings the value he profited over 10 years to $86,000. In June of 2032 Jessica sells her position in the immaculate magic fund. Her $50,000 investment is now worth $336,000. Let’s say she paid 1% in expense ratio/fees (SPUU has an ER of 0.63 but current LIBOR does affect the ERs pretty quickly). With a return of 20% per year instead, her total comes to $310,000. Less her $50,000 initial investment and her profit is $260,000.
Buying; $FNGU, $MIDU, $SPUU, $TQQQ, $UMDD, $URTY
27 y/o - maxing out on the roth IRA and contributing my 10% to roth 401k - mainly for voo/qqq. I recently started nibbling QLD and SPUU (2x leverage etf) and I might rebalance my portfolio if the market keeps on falling, selling some of my QQQ/VOO and buying QLD and SPUU. For my individual account, I'm currently in 2024 expiration call options on some of the big techs and have about 50% cash left. I'll be looking out in the following weeks to buy more growth stock call options (long term). I believe the inflation will calm down and the FED will also ease down on QT and rate hikes, sending the stocks higher towards the end of the year. Most economic indicators aren't really showing slow downs in the economy so... yeah
Thanks to daily rebalancing, leveraged ETFs fall less than that. For example during Covid when SPY lost 33.72%, SPUU/SSO lost 59.35%, and during the GFC, when SPY lost 55.15%, SSO lost 84.63%. But that's still a lot. And if you get leverage through other means, you will have to do the rebalancing yourself which can be stressful in downturns and can turn out badly if you make a mistake.
Don't put money into the mortgage. 4% is almost free money. You can easily make 10-15% with S&P 500 for example. Or 20-30% with 2xS&P (see SPUU).
The S&P 500 is just a list of companies. Funds that track that list of companies can use different amount of leverage. Most funds, like SPY, use 1x leverage. If the value of the companies fall 10%, the value of those funds falls 10%. SSO and SPUU use 2x leverage, so if the value of the companies falls 10%, the value of the fund drops 20%. Conversely, if the prices rise, the gains are doubled.
A leveraged, diversified index fund one way. SSO, SPUU, PSLDX. They do have the potential to go to zero, or significantly under-perform forever, but that's the price you pay for the higher growth potential.
There's bear etfs, leveraged bear etfs etc. SPUU is a spy one for instance.
Could get ballsy with SPUU when you expect a hard bounce.
You should read this. In short, you really need to invest over a longer time period to take advantage of a daily reset leveraged fund. The increased volatility makes it really easy to panic sell. [https://papers.ssrn.com/sol3/papers.cfm?abstract\_id=1664823](https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1664823) Just a quick tip from this paper is that the ideal leverage over the past is around 2x. When volatility goes up, like it is now, decreasing leverage helps reduce drawdowns and reduce the effect of volatility drag. I've read a few other papers on leveraged funds and they all discuss how managing volatility drag is important for maximizing returns. Over the long term, 2x leveraged funds win out but with annualized returns less than 2x. As a young person yet to even find a real job, I'm heavily invested in SPUU, a 2x daily s&p 500 etf. Its in a roth IRA and I'm not planning on selling for a long time.
Lot of people suggesting VOO/VTI, which I think is fine, but given he is a baby and this money doesn’t need to be accessed in the near term, I would actually suggest $50 in QLD / $50 in SPUU. These are levered index funds, so they will be higher risk funds but also will reap higher rewards.
For everyone that puts money into SPY, why not a leveraged ETF like SPUU that goes for 2x the returns. If you’re bullish doesn’t this make sense? SPY gained about 27% this year, SPUU did about 50%. Serious question
I am currently investing into SPY and QLD and am wondering if there may be a good time to invest into QQQ, TQQQ, UPRO, and SPUU. My thought is that for a more conservative investment put recurring payments on the unleveraged etfs and when there are big drops invest into rather the x2 or x3 leveraged etf. Does this make sense? What would you suggest instead and why? I currently am doing great in SPY and QLD but I don’t see why not do the triple leveraged etf when the price is low. Over time the return is quite evidently there.
2x daily leveraged SPX ETF already exists (SPUU). You clearly haven't thought this out very well. It would have to drop 50% IN A SINGLE DAY for the fund to go bankrupt. Now, real world, the fund would probably close a lot sooner than that and just cash investors out at a ridiculously low price. The higher fees, lower liquidity, and daily leveraged volatility drag generally make it not a good idea. But to your larger point, yes, you do need to consider risk adjusted returns (ie sharpe and sortino ratio). But it depends on your investment philosophy. If you treat this as a speculative bet with a very small portion of my portfolio, I really don't care much about the volatility as long as it goes up more than your typical index fund over the long term. https://www.morningstar.com/articles/864256/why-you-should-care-about-risk-adjusted-returns
What do you think of SPUU vs. SSO? SPUU appears to have a lower expense ratio & pays a nice dividend for tracking the same 2x SPY?
Hi there! May I suggest a slightly less risky option? If you've not held a 3x ETF before I suggest taking a quarter or two with a 2x ETF - try $SPUU - It's your brokerage account, use it to learn and have some fun. Definitely don't put in any money you aren't willing to use. A 3x fund could get wiped out in a -33% day but it's hard to see that occuring without a massive shock given the circuit breakers now-a-days. For a 2x fund thats around 50%
Simply, if an ETF aims to provide the return of the index it is tracking, a leveraged etf will return a greater amount. So if SPY gives market returns, the SPUU (2x Leveraged SPY etf) will return double of that. So if SPY goes up 2% in a day, SPUU will go up 4%. If SPY goes down 2%, SPUU will go down 4% as well. That being said, fees and performance will differ. The main thing people will say about leveraged etfs are that they are not usually good for long term investing because they tend to lose value when the market is not making significant gains in your direction. You can google leveraged etfs for more details. It quite well documented with videos and posts.
I suggest the double leveraged ETFs. SPUU is one. This avoids managing option positions, though does have decay. I do have to question why leverage when the market is at all time highs. This can blow up badly. As always, have a plan for up down unchanged. What is your plan on a 20 percent down move? This will be about 40 percent down at double leverage. Likewise, is there a plan to deleverage on an up move? Bear markets are inevitable. Bad ones tend to coincide with massive layoffs.
I know this is going to be unpopular but ARKQ and F - if you look at YTD they have been performing a lot better than the other ARKs. I also am not a fan of K or W, they just seem too “diluted” for lack of a better work in an already disruptive ETF. I much prefer a targeted group of companies GGUS.AX (on the Australian stock exchange) so the equivalent would be SSO/SPUU - it’s a 2x leveraged S&P500 index that I just keep adding to. I can afford the volatility and I think this year and the next the S&P will be very strong. It’s being doing well for me so far. Yes I’m aware of beta-slippage and have accounted for that
/MES fully backed with cash would be equivalent to SPY/VOO/IVV. /MES backed with half cash and rebalanced daily would be equivalent to SSO/SPUU. /MES backed with one third cash and rebalanced daily would be equivalent to SPXL/UPRO. /MES backed with the exchange minimum margin requirement has about 19x leverage.
/MES fully backed with cash would be equivalent to SPY/VOO/IVV. /MES backed with half cash and rebalanced daily would be equivalent to SSO/SPUU. /MES backed with one third cash and rebalanced daily would be equivalent to SPXL/UPRO. /MES backed with the exchange minimum margin requirement has about 19x leverage.
I was curious what the most identical S&P500 ETF to the /MES future is. Obviously the /MES is leveraged so would it be identical to SSO, SPUU, or SPXL? I am assuming SPXL since it has 3x leverage. Thanks.
With 10 percent annual returns, your money will double every seven years. After a while, it's not negligible, especially if you get a year like 2020 with 50 percent returns. But if you want to go with something risky yet still diversified, you might consider leveraged ETFs like SPUU, TQQQ or UMDD with a portion of your money.
> Kelly Criterion I thought the Kelley Criterion had more to do with fixed odds like flipping a coin. The stock market is not a fixed odds, we know over time it continues to grow, with various dips along the way. For example let's compare SPY and SPXL a 3x leveraged SPY, and SPUU a 2x leveraged SPY. The ETF comparison tool I use only goes to 5 years so I can't really see "bad times" in it but there have been some ups and downs. In down times the 3x dropped a bit more than the 2x but there is no comparison in the end. 3x leverage is better than 2x leverage. So I presume 6x would be better than 3x. :) [https://ibb.co/s9n7RRd](https://ibb.co/s9n7RRd)
Yep..they aren't scary. Since, lot of these leveraged ETFs didn't exist before 2006, I did lot of backtesting (going back to 1993 for S&P500 and 1999 for Nasdaq). I tested various scenarious where you DCA $1000 every month into each of QQQ, QLD, TQQQ, SPY, UPRO, SPUU and compared returns of QQQ vs QLD vs TQQQ and SPY vs UPRO vs SPUU. I specifically took starting point as peak of dot com bubble and tested it across 15 yr, 20 yr timeframes and still the leveraged ETFs significantly outperformed normal ETF. Key is to stay patient and not to overreact for short term fluctuations.
You're approaching irrational markets with a rational thought about valuation. People are valuing Tesla for many reasons. As long as Tesla hold that level of valuation, they can ultimately enter any number of markets they wish, and they will have the potential to destroy the competition with cheap access to capital, far superior ability to innovate. From a capability perspective, one of the largest battery production lines in the world, and easy access to a rocket company with the largest web of satellites in the world. I can picture many markets they can disrupt with those capabilities. You are not wrong about the current valuation but tread with caution. Disclosure: I am not a directly Tesla investor, I do also feel they are currently overvalued. I am exclusively in SPUU atm.