tqqq 和 qqq 联合就是力量？
I am thinking about the following idea. I have not started yet, but would like to start in the near future. This idea seems to be better than methods using the 50:50 ratio or 70:30 ratio, because the total absolute dollar amount in tqqq can be limited or capped to one’s comfort level. If you have, say, $2 m in the market, 50:50 ratio would mean $1 m in tqqq, which may not be prudent. Tqqq can be great in a rising market, but can theoretically go to 0 in a major crash.
Using the following method, I can cap my tqqq to a comfortable level. The following example uses $100k in tqqq. If you prefer $200k in tqqq, just do 2x to the following calculation. If you prefer $300k in tqqq, then do 3x to the following calculation. This will not change the % of return below.
The following is just an illustrative example; I have not started this method yet. I plan to start in the near future. This is just a hypothetical back testing for the past year and a half to comare three different methods.
I. Case Study on Feb. 2020 to July 2021, Example (A):
Put $100k into tqqq on 2/14/2020. Note that this example starts with a bad timing, at the market top right before the crash. Therefore, this example takes into account unexpected and nasty crash. This is not a best case scenario that is too good to be true.
Tqqq dropped from $57.27/share (Feb. 14, 2020) $17.76/share (March 20, 2020), approximately 70% drop.
In this method, every time tqqq drops by 20%, I add another $20k into it. If the drop is less than 20%, then do nothing.
Start with $100k tqqq on Feb. 14, 2020:
Tqqq index drops 20% to $45.82/share, I add $20k into my tqqq. My tqqq maintains at $100k.
Tqqq index drops another 20% to $36.65/share, I add $20k into my tqqq. My tqqq maintains at $100k.
Tqqq index drops another 20% to $29.32/share, I add $20k into my tqqq. My tqqq maintains at $100k.
Tqqq index drops another 20% to $23.46/share, I add $20k into my tqqq. My tqqq maintains at $100k.
Tqqq index drops another 20% to $18.77/share, I add $20k into my tqqq. My tqqq maintains at $100k.
Money out of my pocket:
Initial $100k + additions $100k = $200k.
Then tqqq increases from $17.76/share to $130/share (as of 7/12/2021).
Every time tqqq increases by 20%, sell $20k and put it into qqq.
Tqqq index increases 20% to $21.31, I sell $20k of my tqqq. My tqqq maintains $100k.
Tqqq index increases 20% to $25.57, I sell $20k of my tqqq. My tqqq maintains $100k.
Tqqq index increases 20% to $30.69, I sell $20k of my tqqq. My tqqq maintains $100k.
Tqqq index increases 20% to $36.83, I sell $20k of my tqqq. My tqqq maintains $100k.
Tqqq index increases 20% to $44.19, I sell $20k of my tqqq. My tqqq maintains $100k.
Tqqq index increases 20% to $53.03, I sell $20k of my tqqq. My tqqq maintains $100k.
Tqqq index increases 20% to $63.63, I sell $20k of my tqqq. My tqqq maintains $100k.
Tqqq index increases 20% to $76.36, I sell $20k of my tqqq. My tqqq maintains $100k.
Tqqq index increases 20% to $91.64, I sell $20k of my tqqq. My tqqq maintains $100k.
Tqqq index increases 20% to $21.31, I sell $20k of my tqqq. My tqqq maintains $100k.
Tqqq index increases 20% to $109.96, I sell $20k of my tqqq. My tqqq maintains $100k.
Tqqq index increases 20% to $131.95, I sell $20k of my tqqq. My tqqq maintains $100k.
The money that tqqq spits into qqq has been growing. Net growth in qqq from DCA from the spit-out (based on curves available on Google): approximately $86k.
Total value as of 7/12/2021: tqqq $100k + qqq (240k + 86k) = about $426k.
Return: (426-200)/200 = about 113%.
II. Case Study on Feb. 2020 to July 2021, Example (B):
In this example, I sell tqqq only after it doubles. Everything else is the same as Example A.
First, as in Example (A), start with the same $100k in tqqq at market top Feb. 14, 2020.
Tqqq index drops 20% to $45.82/share, I add $20k into my tqqq. My tqqq maintains $100k.
Tqqq index drops another 20% to $36.65/share, I add $20k into my tqqq. My tqqq maintains $100k.
Tqqq index drops another 20% to $29.32/share, I add $20k into my tqqq. My tqqq maintains $100k.
Tqqq index drops another 20% to $23.46/share, I add $20k into my tqqq. My tqqq maintains $100k.
Tqqq index drops another 20% to $18.77/share, I add $20k into my tqqq. My tqqq maintains $100k.
Money out of my pocket:
Initial $100k + additions $100k = $200k.
Then tqqq increases from $17.76/share to $130/share (as of 7/12/2021).
Every time tqqq increases by 100% (doubles), sell $100k and put it into qqq. This maintains $100k in tqqq.
Tqqq index increases 100% (doubles) to $35.52/share, I sell $100k of my tqqq. My tqqq maintains $100k.
Tqqq index increases 100% (doubles) to $71.04/share, I sell $100k of my tqqq. My tqqq maintains $100k.
Currently as of 7/12/2021, Tqqq index is at about $130/share. My tqqq would be at $182k.
By selling only after tqqq doubles, there is less action needed.
Net growth from spitting and investing DCA into qqq along the way: about $88k net increase, based on curves estimated at Google.
Total value: tqqq 182k + qqq 200k + 88k = about $470k.
Return: (470-200)/200 = about 135%.
III. Control (Example C):
My control is the simple qqq method, without using tqqq. Put the same $100k into qqq Feb. 14, 2020 ($234.64/share). It decreased to $170.70/share on 3/20/2020.
qqq index drops 7% to $227.60, I add $20k into my qqq.
qqq index drops 7% to $211.67, I add $20k into my qqq.
qqq index drops 7% to $196.85, I add $20k into my qqq.
qqq index drops 7% to $183.07, I add $20k into my qqq.
qqq index drops 7% to $170.26, I add $20k into my qqq.
Total value at the market bottom is about $160k due to market crash, based on estimate using curves at Google.
Total value as of 7/12/2021, about double from the bottom: $320k.
Money out of my pocket:
Initial $100k + additions $100k = $200k.
Return: (320-200)/200 = 60%.
IV. Conclusions:
[1]. Compared to simply using qqq, it is better to combine qqq with tqqq. Combination is creation.
[2]. The rate of return can be doubled (60% vs. 135%) with very little extra work.
[3]. (B) is the best. When tqqq decrease by 20%, add more money into tqqq to maintain at $100k. When tqqq doubles, sell $100k and put it into qqq, and maintain tqqq at $100k.
I use $100k as an example. I may gradually accumulate my tqqq to cap at $500k. It can be $200k, or $100k, for different people. This will not change the rate of return (%).
Any feedback? Experts in this group, feel free to comment.
Best regards,
David Meng
Author of book at Amazon “The Intelligent Small Investor”.
