Leveraged ETFs

There has been some talk here and on TastyTrade about the dangers of leveraged ETFs and how they fall harder and faster than their underlying ETFs. So I did a little research of my own based on the 2018 correction starting in October. 🙂

SPY -18.3% from 9/20 high
UPRO (3x SPY) -47%
QQQ -21.3% from 10/1 high
TQQQ (3x QQQ) -55.2%
IWM -26% from 8/31 high
TNA (3x IWM) -61.3%

In all cases, the leveraged ETFs have fallen less than 3x the drop of the underlying. With respect to whether leveraged ETFs keep up with the underlying on a bull run, I won’t cite them all. However, since the Jul 2010 low to the Oct 2018 high, QQQ was up 304% and TQQQ was up 3,619%. It may be true that the 3x ETFs don’t work for day trading due to one-day discrepancies but over time, the leveraged shares make a fine investment imo, especially if you have time to push thru the slogs to the next rally.