OT: Saul vs. QLD

QLD is and ETF that tries to match 2x the return of the Nasdaq 100 index,
and has had results and volatility similar to Saul's stocks at least 
from 2008. I know QLD is an etf that is not normally held long-term but
I find the comparison interesting and thought others might also. The 
returns for Saul I found searching this board and believe are correct
but please let me know if this is not the case.

Year    Saul    QLD

2008   -62.5   -72.89
2009   110.7   121.20
2010     0.3    36.90
2011   -14.5     0.04
2012    23.0    34.77
2013    51.0    82.11
2014    -9.8    37.59
2015    16.0    14.74
2016     2.5    10.17
2017    84.0    70.34
2018    86.0    37.30 Through  09/30/18
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What’s the point of this?

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What’s the point of this?

The point is that it’s pointless. They all are trying to figure out how Saul does this. They are trying to find a mechanical way to match Saul’s returns but that is why they are failing. There isn’t a mathematical way to figure out Saul. When you think that you have it figured out he will be moving on to another way of investing. The best way to match Saul is to not have any rules, you need to be able to move in whichever direction the market takes you. Keep you sight on what parts of the market is growing.

Andy

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The returns are not useful, because they do not track what happens with leveraged ETFs with real money. If you buy one and hold it for a long period, you will notice the perverse outcome of their leverage, which must be balanced daily: Even if you are right, you can still make very little money, or even lose money. It’s the math and the derivatives, which I am not going to bother to explain, because the bottom line is the same: It doesn’t work for longer holding periods, it just looks like it does on paper.

Learn from this board, and you will learn things that do work, with real money. It takes more focused application than buying a leveraged ETF, but the latter is essentially a guaranteed failure as an investment held anything like the kind of time frame you outline.

Sorry, but that’s just the way it doesn’t work.

Wot

5 Likes

These ETFs and funds are strictly for short term trading. They get their leverage by buying options and futures. Both of these have time decay which ultimately makes you lose money in the long run. If it were as simple as doubling the return of the stock market,yeah, that would be the way to go. But you can’t. Even margin comes with an interest charge that negates the added return, and opens the risk of a margin call.

On top of that, just doubling the volatility of an index does not mean doubling the return. If you find the chart of any that have been around for a while, like Rydex, you’ll see they get absolutely killed in bear markets and do not rebound to previous peaks at the same time as the index itself. Volatility or beta does not necessarily equate to higher returns.

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These ETFs and funds are strictly for short term trading

ETFs, short term trading? Sorry, but what has this to do with discussing individual growth stocks?

Please refer to the Monday Morning Rules of The Board. This thread is just digital clutter and belongs somewhere else. Thanks :slight_smile:

https://discussion.fool.com/monday-morning-rules-of-the-board-34…

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