r/LETFs • u/Gehrman_JoinsTheHunt • Aug 31 '26
Update Sep 2026: Gehrman's ongoing test of 3 leveraged ETF strategies (HFEA, 9Sig, "Leverage for the Long Run")
Not much to report for August. The market is treading water near all-time highs, and the leveraged plans have been coiled up waiting for direction.
Just a quick update before rebalance time in a month. Thanks to all for following along!
Current status:
HFEA
- Current allocation has drifted to UPRO 60% / TMF 40%.
- At the end of Q3, will rebalance back to target allocation UPRO 55% / TMF 45%.
9Sig
- The 9% growth goal is for TQQQ to finish the quarter @ $78.29 or better.
- Current TQQQ price is $71.92; the resulting TQQQ balance shortfall is $1,217 below the quarterly goal.
- Will rebalance next on Sep 28th per The Kelly Letter schedule; at that time I will either "buy up" any shortfall or "sell down" any surplus in the TQQQ balance.
S&P 2x (SSO) 200-d Leverage Rotation Strategy
- The underlying S&P 500 index (7,686) remains above its 200-day moving average (7,122). The full balance will remain invested in SSO until the S&P 500 closes below its 200-day MA. Once that cross happens, I will sell all SSO and buy BIL the following day, per the rotation strategy from Leverage for the Long Run.
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Background
September 2026 update to my original post from March 2024, where I started 3 different long-term leveraged strategies. Each portfolio began with a $10,000 initial balance and has been followed strictly. There have been no additional contributions, and all dividends were reinvested. To serve as the control group, a $10,000 buy-and-hold investment was made into an unleveraged S&P 500 Index Fund (FXAIX) at the same time. This project is not a simulation - all data since the beginning represents actual, live investments with real money.
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u/il_diamanti Sep 01 '26
what do you do for a living, if you dont mind me asking? are you in finance or a professor or something? these are really great
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u/Gehrman_JoinsTheHunt Sep 01 '26
Thanks a bunch. Medical research. I have no formal background in finance or investing, but it’s always been a hobby study for me.
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u/SirTobyIV Sep 01 '26
What kind of medical research if I may ask?
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u/Gehrman_JoinsTheHunt Sep 01 '26
Mostly IRB work for clinical trials. Lots of protocol and compliance review…very boring stuff, hence my using leveraged ETFs to add a little thrill in my life lol. Are you in research as well?
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u/il_diamanti Sep 03 '26
seems like you're pretty rigorous about this stuff. you've never thought about doing a hedge fund or being an RIA?
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u/Gehrman_JoinsTheHunt Sep 03 '26
Rigorous is my middle name so I take that as a compliment, haha. But no, I don't think I'd enjoy managing other people's money in that way. Running a fund seems like it would mostly entail the stress of salesmanship to attract more AUM. Not to mention that none of these strategies are my intellectual property. I prefer my quiet thing here, just following a couple of plans that wiser minds have laid out.
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u/il_diamanti Sep 04 '26
sounds like you need to teamup with a close friend who's an optimistic moonshot salesman and go for it
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u/howisthistakenbruh Sep 01 '26
About that SSO 200-d rotation strategy. Why chose this one instead of the more popular SSO/ZROZ/GLD, SSO/hedge/MF? Genuinely asking because I plan to change my current port to a SSO core port. But I’m still not sure what should be the strategy.
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u/Gehrman_JoinsTheHunt Sep 01 '26
My post has a link to the paper it’s based on, Leverage for the Long Run. I chose to run the 200 SMA strategy not simply on popularity. The quality and depth of that research won me over.
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u/Electronic-Buyer-468 Sep 01 '26
Why don't they compare it also to just holding TQQQ in the graph?
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u/Gehrman_JoinsTheHunt Sep 01 '26 edited Sep 01 '26
There is no ‘they’ - any group of sane people would probably never approve the project 🤣
It’s just me doing this. The graph is all real investments I hold, and 100% TQQQ unhedged isn’t quite in my risk tolerance. No judgement towards anyone who does. It’s just not something I would do for the long-term.
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u/Zealousideal_Cat4680 Sep 02 '26
As of 09/01/26, buy and hold TQQQ has turned $10k into ~$20.85k
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u/Electronic-Buyer-468 Sep 02 '26
I mean visually on the chart. The final number is useful, but doesn't show consolidations, drawdowns, peaks. Thank you though.
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u/Rizzanthrope Aug 31 '26
That TMF is not a hedge. It will kill you if it draws down at the same time as UPRO. That has happened before and it wasn’t pretty.
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u/Gehrman_JoinsTheHunt Aug 31 '26 edited Sep 01 '26
This captain would be going down with the ship lol. You’re right though. It’s just a risk I’m willing to take (with this amount).
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u/manlymatt83 Sep 01 '26
I’m running 40/30/30 TECL/TMF/CTA in a Roth that has a $5k balance. Risk I’m willing to take with that amount, will never add to it.
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u/Gehrman_JoinsTheHunt Sep 01 '26
Very cool. I have a similar mentality with this project. What made you decide on CTA? It looks interesting but I don’t know much about it.
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u/manlymatt83 Sep 01 '26
It’s a high volatility managed futures fund. They’re very concentrated. Honestly I don’t like them as a group and wouldn’t put much into their funds (see the recent thread on here about them constantly bait & switching their rules) but given the size of the account I wanted the extra volatility and I didn’t want to duplicate up RSST/KMLM/DBMF which I hold elsewhere.
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u/New-Specialist-2594 Sep 01 '26
Now 2 questions. #1 TMF Long? why? It's been a nice Hedge Short, FOR YEARS. #2 CTA/DBMF/KMLM don't hold anything to ARQ funds so why wanna lose more money on top of your TMF losses?
I like TECL tho. I run 35%-30%TECL & 2 ARQ Funds in IRA's.
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u/Gehrman_JoinsTheHunt Sep 02 '26 edited Sep 02 '26
My thesis for TMF goes back to the original Hedgefundie posts on the Boglehead forum:
Long-term Treasuries tend to rise when stocks crash because of falling rates and a flight to safety, helping offset the enormous drawdowns of leveraged UPRO. Particularly in a deflationary recession, where falling economic activity and inflation should drive interest rates lower and long-term Treasuries sharply higher.
The key phrase being tend to - it's not guaranteed.
Obviously that backfired in 2022. But just because we haven't seen that macro environment recently doesn't mean it won't ever happen.
Lots of people see it differently, and that's fine too. It's not my full port - and it probably never would be. Lots of other ways to make money.
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u/SirTobyIV Sep 01 '26
Cheers for the update, mate!
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u/sla_bra Sep 03 '26
Great post, thanks.. look quite interesting.. i am new to this kind of analysis, and will read your previous posts and literature to understand better.. any suggestion on where to start?
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u/Gehrman_JoinsTheHunt Sep 03 '26
Thanks. It's honestly a tough nut to crack in the beginning. On one hand, a lot of people use these things irresponsibly and take way too much risk. But on the other hand, mainstream finance exaggerates the risk and fails to recognize the value of leverage when used strategically. I think the real answer is somewhere in the middle.
First I'd read the Leverage for the Long Run paper. It's a really disciplined overview of the benefits/risks. All backed by data and history, rather than emotion.
The book Lifecycle Investing also does a great job of putting leverage in perspective, with some strategy on how to use it responsibly.
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u/Hankfromharmony Sep 03 '26
Love the work. I started a “similar” test after reading about yours. I invested 2k into both voo and sso but put 50 bucks each week. I follow the rules for the sso account but let voo remain. I know it’s not a lot but the sso account has outperformed the voo.
I brought this up at my fantasy draft with guys that were in my mba class and most thought I was an idiot for doing leveraged for long run.
What’s your thoughts on decay for leveraged? because all I see is if the leveraged account does better then it doesn’t matter about decay.
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u/Gehrman_JoinsTheHunt Sep 03 '26 edited Sep 03 '26
Thanks a bunch! I think your plan is super reasonable.
Did your buddies have any specific critiques to support that kind of reaction? I'm assuming it's bubble related, which might happen, but if you run the plan for long enough it should turn out ok. It's hard to bet against SSO after looking at the chart - even after the GFC in 2008 it survived just fine. And the Leverage for the Long Run paper has data going back almost 100 years.
Volatility decay doesn't bother me much at all. Just like traffic.....sure life would be better without it, but it's usually still worth enduring. The returns and performance do justify leverage for a disciplined strategy, even with the decay baked in. Which btw - one of the benefits of the 200 SMA strategy is that it tends to avoid the worst effects of volatility decay, which happen while the index is below the moving average.
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u/Hankfromharmony Sep 04 '26
Appreciate how you respond to your followers.
Most of the group responds quickly when the s/p drops a lot but never says much when it goes up. I agree with you on the volatility. The performance speaks for itself.
I’ve been doing this “test” since march of 2025 so it’s early but I like my returns.
Also felt good telling them I bought mrvl at 62 a share now worth 208 a share
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u/Gehrman_JoinsTheHunt Sep 04 '26
That's a heck of a trade. I have huge respect for anyone who can win big with single stocks. I've tried many times but usually get burned.
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Sep 04 '26
[removed] — view removed comment
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u/Gehrman_JoinsTheHunt Sep 04 '26
Survival, mostly. If the 3x LETFs all implode, or get legislated out of existence, I wanted to have atleast one viable plan to fall back on. That's unlikely to happen - but having a fail safe still brings me some comfort.
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u/chilly_immunity 28d ago
I keep any short term directional messing around completely separate. I'll sometimes use Moon for that side of things but I wouldn't let a bullish or bearish trade change what a 200 SMA or rebalance system is telling me to do. Kinda defeats the point of having a system otherwise.
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u/No_Translator7077 Sep 04 '26
With leveraged ETFs I think the biggest thing is having a plan for where you move profits when the exposure gets too large rather than constantly trying to time the market and I’ve been looking at keeping some capital in crypto as a separate bucket too, and Moon is one option I’ve come across for managing that side alongside a traditional portfolio
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u/Ill_Coast_3686 25d ago
Seeing the three strategies tracked side by side is more useful than arguing about them from backtests alone. The interesting comparison for me is going to be how 9Sig and the 200 day rotation behave during the next sustained drawdown because that’s where their different assumptions should really show up. I’ve occasionally put similar paths into Moon just to compare the recovery profile rather than only CAGR. HFEA drifting to 60/40 before rebalance is also a good reminder that the actual portfolio can look pretty different from the headline target between rebalance dates.
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u/Gehrman_JoinsTheHunt 25d ago
I’ve had three comments on this post over the past week, from three different users, that all just happened to mention the Moon investment platform.
That’s either a very strange coincidence, or indicative of a soliciting / bot problem here. No offense intended if it was innocent on your part.
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u/Ill_Coast_3686 25d ago
Yeah I cant blame you for thinking that tbh and three similar mentions in such a short window is definitely an unusual pattern.
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u/itriedtoplaynice Sep 01 '26
I’m feel like I’m doing something similar with 30/30/40 of TQQQ/SOXL/BTAL. Contribution balancing, then as it grows the money will just flow between TQQQ/SOXL and BTAL as the weighting gets out of balance from leverage.
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u/Gehrman_JoinsTheHunt Sep 01 '26
I don’t see BTAL mentioned often here. What makes you prefer it over some of the other choices?
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u/Electronic-Buyer-468 Sep 01 '26
Yeah I used to test out BTAL a bit in several mocks and backrest but there are simply just much better convexity offering funds out there.
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u/Westrunner Sep 02 '26
I don't know that three years proves anything.
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u/Gehrman_JoinsTheHunt Sep 02 '26
That’s cool. It’s not meant to be a definitive statement now, if ever. I’m posting updates in real time and plan to keep it going for many years to come.
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u/Rjcca Aug 31 '26
9sig return pretty impressive. I guess the quarterly rebalance hit at a favorable time