Given that we all have confidence in the long-term potential of QQQ, should, in addition to holding that, we also hold TQQQ? It seems as if the answer would be yes, even with the risk of price decay. And at the very least, should someone age zero be invested in it (as well as the leveraged S&P fund)?
@esxokm Not sure why this is on the Roth IRA board. It’s probably a more appropriate post for one of the investing specific boards.
You are makings assumptions without evidence. Not all of us have confidence in QQQ. Personally, I look at the fact that the NASDAQ composite hit 5048 on March 10, 2000 and then proceeded to fall to 1114 on October 9, 2002 - a 78% drop. It did not recover to 5048 until April 23, 2015 - over 15 years later.
The internet had it’s dot com crash. I wonder what they’ll call the AI crash.
Sure, if you have a way back machine and can go back to when TQQQ started and invest then. Past performance is not indicative of predict future performance, and given that TQQQ will drop in price faster than QQQ if there is a crash, in addition to the fact that TQQQ has an expense ratio of 0.82% vs. QQQ’s 0.18% make it not a buy, IMO.
AJ
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Thanks for the reply. Some good points here.
My reason for putting it here is somewhat practical…honestly, I have a hard time navigating the boards now, and this one was easy to find.
But beyond that, I’d say that many of use QQQ in Roths.
From what I see at Seeking Alpha, unless its data is wrong - and sometimes I wonder, but - the 10-year performance of TQQQ is 2800% cumulative total return. What I was thinking was is TQQQ good for a child Roth or a child trust at age zero? In other words, if someone is very young, is the risk appropriate for some small portion under portfolio management practices?
The reason for the performance would seem to be clear: innovation in the past plus 3x performance (or more accurately whatever net that would be of expenses).
I get what you mean by past performance. Always true. (That actually argues for technical trading and not generating long-term gains, a strategy that should be part of any investor’s approach.) And I do recall the 2000 crash. And the Great Recession. And yes, there will be an AI crash, but I wonder if getting back to breakeven will be done in less time because of the increase in passive investing. Who knows. (And I suppose that’s the point, who knows…which can lead to upside risk too.)
Which is the point. No one knows. For all any of us know, Coca-Cola will be bankrupt in ten years. Which is why I am thinking TQQQ for a small speculative portion for very young individuals. If grandparents constantly dollar-cost-averaged into it, would it be a sane choice? What about for the S&P 500? Or a dividend ETF? (I wonder if there are xX dividend funds?)
You say though not a buy, and I respect that. You may be correct. You probably are for the most part. I will continue thinking about it based on your opinion. But I just wanted to flesh out my thinking a little. (Back to AI for a sec…I do wonder sometimes what is going to happen when the use cases fail…not all will fail, but even a little failure will up those conservative discount rates and knock shares down.)
My son is invested in a similar manner in his Roth - but he is using the 2x version.
There are of course 3x and 2x S&P ETFs if you want (relatively) less tech exposure.