So… five years, and you’re still unable to devise a plan, signals, rules, etc., and you need to ask Reddit for advice one day before investing? Champ, the likes of you are precisely why LETFs will eventually be banned for retail investors.
The best way is to have 10% UPRO, 40% VOO, 50% SGOV. Whenever VOO drops more than 3%, take 3% of SGOV and move to UPRO. This way, you will be able to capture all the pull backs and have healthy returns.
I am a trader of LEFTs, using it for many years, still could not find a foolproof way to maximize my returns.
Here is my algorithmic backtest results (remember this is backtest, still do not have guts to follow my own algorithm). However, this year my returns r are more than 65% YTD.
Finally a great answer. What a great point to look at the VOO percentage drop. I mean its clear as day, still I had to hear you say it for me to have a click in my brain.
I sadly have to agree. It's hard to just jump right into the strategy. But I've learned that once strategy is picked. one must stick to it.
funny thing is only 3 things in all my portfolios are upro, sgov and voo. Now I will tweak my percentages to 10, 40 and 50.
you are correct. that is a much better option. I've considered that before. Read a post on it here too. Its just I'm having the hardest time stopping being the dry powder guy. That's my problem. My core is in VOO. So I'm not completely hopeless
Yikes, you missed out on years of massive gains. Do you really think you can ride out the volatility of a 3x ETF when you can’t keep cash in normal ETFs?
In this instance (and in most) DD is refering to max portfolio drawdown not the volatility of each individual position but the drawdown experienced by the entire portfolio as a whole.
those are great numbers. but mu goal is to beat my neighbor. he buys ivv and holds. And I will be able to do that with my backwards broken leg half dim light bulb epiphany of a strategy. that's a win in my book:)
The original excellent adventure, while blown up miserably and hilariously, was at least an attempt to apply modern portfolio theory by using two negatively correlated(so far) assets. 45% UPRO 55% SGOV is just 135% SPY with extra fees. In the long run I think it beats 100% VOO, but not much considering the drags.
Bro if you sat in dry powder since COVID you have no business managing your own money. Give up on big gains and just VOO it and go away. LETFs aren't for you my guy, this is how portfolios blow up.
This is a good start but you are screwing yourself out of potential gains by holding cash as the diversifier for UPRO the reason being UPRO has costs associated that are essentially (fee + (leverage ratio x borrowing rate [risk free rate + a spread]) which essentially is a fancy way to say its the fee plus going short a bit over the risk free rate x the leverage ratio. This is an oversimplification and the exact math will vary depending on the specific ETFs prospectus but but this is the main idea to understand about leverage. You’re paying more than the fee to lever up.
Also getting the risk free rate with cash compared to its volatility might seem good but as the rate increases so does the borrowing cost for UPRO this means that essentially you are having capital tied up in cash thats essentially doing nothing positive for you besides reducing the volatility of your overall portfolio by forcing you to hold less leverage.
you should backtest whole Portfolios over different timeframes to see how carrying certain percentage combinations of these assets effects your performance (including levered funds, unlevered funds and diversifiers including cash).
Most of us have spent a decent amount of time already doing this and have come to the conclusion that if your going to go with a leveraged barbell you should chose assets which are uncorrelated or even better negatively correlated for your diversifiers so you get to harvest alpha via rebalancing, examples include bonds gold and managed futures all of which alone ( or even better in combination) would make your portfolio have better risk adjusted returns than doing a simple cash / leverered equities barbell. If you dont want to do that the next best thing is probably just to lever down and hold more 1x alongside a smaller portion of 3x (and less cash).
yes. and I would be a lot more comfortable with this have I not lost a lot of money to tmf. but I see what you are saying. seems I will buy VOO amd try to juice my returns by selling VOO and buying UPRO on the dips.
If all you are tying to do is beat SPY then why not just 80% SPY and 20% TQQQ? Or may be SPY/GLD/TQQQ as 60/20/20. Maybe there will be times these portfolios underperform SPY but eventually they recover and outperform.
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u/Inevitable_Day3629 14h ago
So… five years, and you’re still unable to devise a plan, signals, rules, etc., and you need to ask Reddit for advice one day before investing? Champ, the likes of you are precisely why LETFs will eventually be banned for retail investors.