I am sure many people immediately freaked out reading the title - 3x leveraged ETF is NOT investing, it's gambling, the decay will eat all your profit, the risk is too high.
In certain situations, these are all true, and they read these from somewhere, a book, an online article, reddit, etc. But, with knowledge and discipline, TQQQ can be an excellent investment vehicle with unproportionally high upside vs relatively small down side risk.
Using one of my own investment (or trading, whatever you feel like to call it) example, in 2022, TQQQ crashed hard from 80 to 30 (pre-split number, today's number would be 40 to 15). I work in tech, so I checked the numbers from leading tech companies, and their revenue and profit were stronger than ever. It was clearly an oversold situation. I divided my money in 5 portions and began loading TQQQ every month, initially the market continued dropping but eventually hit the bottom and began rebounding. After finished loading, the average cost was around $27 (or $13.5 after split). I held on to them and began unloading starting from $75, eventually sold everything, with a \~3x gain in less than a year, with little risk or loss of sleep.
Now, why it was a low risk with great upside? For a few reasons:
1. **First**, the underlying security is QQQ, an all tech index, it's not an individual stock that may go belly up. QQQ will never go bankrupt.
2. **Second**, the market was significantly oversold, the risk of going down is much lower than going up. I made the judgement by looking at the business health of the big tech. Plus, I work in tech so I am confident I didn't miss anything important.
3. **Third**, how about the decay risk? It's real but it's greatly exaggerated. It's also ignorable if the market goes mainly one direction. I made an Excel model to compute different scenarios and the risk of losing money was much much lower than making money.
4. **Fourth**, QQQ being an index is the biggest defense of any individual stock risk. I was tempted to load up $Meta at $90, which would go up 7X. But eventually I decided to stay with the index and let leverage amplify the returns.
Many people blindly follow what they read, diversify, no leverage, and I see too many people wasting their money on mediocre stocks falling behind index, or missing once in a life opportunity to become financial free during market crash.
I've been trading for 15 years and has been losing for the first 7-8, during which I did most people did - I diversify, I found 'undervalued' stocks, which never came back, I hedge my long which bleeded gain, etc. Not until a few years ago did I find my comfort place. One is the deep knowledge with big tech, which allows me to all in and hold on. The other is using market crash as an opportunity. TQQQ is one great way to amplify the overselling during market crash, which is almost certain followed by a rocket like comeback. I actually have a great way to combine TQQQ and SQQQ to gain with 0 risk but the gain would be much smaller so I am willing to take a bit risk in exchange with much higher gains.
There's another trading during quick and deep market crash (e.g. the one during liberation day) that easily get you gains with very little risk. It's related to VIX and you can find it if you look and think.
Ever since I found how to profit from market crashes, I no longer fear bloody red days, they made me excited.
Investing is not about reading books, 'following advices' blindly. **Investing is about thinking, real thinking, deep thinking, finding strategy that fits your financial situation, domain knowledge, and personality.** For me, I am not afraid of risks, so I am willing to take calculated risks. But that may not be you, but you need to find a way that fits your personality. At the end of the day, your strategy must have better returns than SPY. Otherwise, why bother? Just buy VOO and forget.
(I posted initially in value investing but don't know why mod removed it)