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I dont think that paints an exact picture.
This is a fully collaterised product, your maximum loss is your stake, which is the same risk as any long position .
Buying QQQS isnt shorting the market with leverage.
True, you can't lose more than your original stake. But it still is leveraged in the sense that your gains/losses are magnified by a factor 3. I.e. if you invested 100 and the indice rises 10% tomorrow, you will lose 30 (and if the indice increases 30% you lose almost everything you had invested - that is leverage).
And this is not even taking into account beta slippage, which will kill your performance if you have to hold it long term waiting for the tide to turn in the direction you are hoping for (meaning even if you end-up being right, if you had to hold the product for too long before your expectations came true you could still be losing money).
So just my view, but IMO this type of ETF shouldn't be held for more than a couple of days (either as a cover for other positions, or if one has a very strong conviction that the indice will drop in the immediate future).
For reference, see below the effect of beta slippage on 3x leveraged long and short ETFs with 10% daily volatility. After 50 days the market hasn't moved but the 3x short ETF has lost 94% of its value. Of course 10% daily volatility is an extreme exemple, but lately the markets aren't exactly smooth either and beta slippage is far from insignificant.
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nice chart but its meaningless. I already covered the case for volatility .
6 months of data is not painting the actual picture.
I happen to think we are back into February , first week of March territory .
So Im playing QQQS and a few others to catch the same type of trend that happened back then . While your long holdings were crashing thru the floor the index short ETFS like QQQS was offering 100%+ gains during that window, so like I say your chart is meaningless as its a chart of the post MARCH market crash recovery, but Im talking about benefiting from an upcoming potential second market crash and not losing your shirt.
Those who are smart enough to see the difference can invest in a perfectly safe non-leveraged ETF with very limited risk as a hedge against the winds that are blowing thru society that may see a second major dip in coming month.
Its all opinion . If you dont think 'winter is coming' dont buy into it.
If you do , then buy some .
I bought more SHORT non-leveraged ETFs this morning, record covid cases worldwide yestreday and Faucci is talking late 2021 early 2022 before normality.
Anyone who thinks the same , free country, jump on board.
Anyone who thinks because of this I am exposed to potential leveraged margin calls from my brokers is talking out their .....
I have lost track of how many times you wrote "non-leveraged" in the past few posts
The QQQS ETF you are referring to is leveraged though ... see the KIID for the ETF, whereby the very issuer of this product states "losses will be magnified by leverage". I don't think anyone is claiming that holding this ETF is subjecting you to margin calls (obviously it isn't, it is the point of the product to avoid it, and package the complexity of leveraged investment into a simple to hold ETF). But no margin calls doesn't mean no leverage: there is leverage built into the product to achieve the triple magnitude effect - essentially the issuer is borrowing and/or buying leveraged derivatives on your behalf to achieve the tripling effect, the underlying financial structure is significantly more complex than a basic ETF tracking an indice.
On the chart I posted. It illustrates the effect of beta slippage on leveraged ETFs like QQQS (and shows that effect is even more pronounced for short ETFs than it is for long ETFs). The is a generic concept and nothing to do with specific marked conditions this year. The point is that holding this type of ETF for any prolonged period tends to cost quite a bit of money regardless of what the market does.
Hence why those should only be used for a short period of time an if one has very strong conviction or requires cover. As I said, nothing wrong with using that ETF if you have very strong conviction the Nasdaq will crash in the coming days. But if we are talking weeks or even more so months, then it is a fairly costly and risky instrument to use.0 -
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I have lost track of how many times you wrote "non-leveraged" in the past few posts
The QQQS ETF you are referring to is leveraged though ... see the KIID for the ETF, whereby the very issuer of this product states "losses will be magnified by leverage". I don't think anyone is claiming that holding this ETF is subjecting you to margin calls (obviously it isn't, it is the point of the product to avoid it, and package the complexity of leveraged investment into a simple to hold ETF). But no margin calls doesn't mean no leverage: there is leverage built into the product to achieve the triple magnitude effect - essentially the issuer is borrowing and/or buying leveraged derivatives on your behalf to achieve the tripling effect, the underlying financial structure is significantly more complex than a basic ETF tracking an indice.
On the chart I posted. It illustrates the effect of beta slippage on leveraged ETFs like QQQS (and shows that effect is even more pronounced for short ETFs than it is for long ETFs). The is a generic concept and nothing to do with specific marked conditions this year. The point is that holding this type of ETF for any prolonged period tends to cost quite a bit of money regardless of what the market does.
Hence why those should only be used for a short period of time an if one has very strong conviction or requires cover. As I said, nothing wrong with using that ETF if you have very strong conviction the Nasdaq will crash in the coming days. But if we are talking weeks or even more so months, then it is a fairly costly and risky instrument to use.
Posters have been implying buying this ETF is buying with leverage , which its not.
IMO your scaring off newbie investors who can perfectly safely trade these instruments and benefit from trends with yourr talk of huge losses.
And its a myth to say holding these for months is both risky and costly, the expense ratios can be pretty low and whether its a bear or a bull run then months or even multi-years of a trend in your favour and you will gain.
As I said earlier this week, I thought this market (circa Mar-June) was a once in a lifetime oppurtunity, but IMO here we are again with a good chance of a repeat and Im betting on that. So what ever you did back then that made you money just repeat, which in my instance was buying short ETFs which paid handsomely on the crash , picking up stocks on the dip and then riding the recovery.
I dont like people telling me what to do, nor am I implying anyone should do what I tell them. Im simply putting out there what I do .0 -
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It *is* buying with leverage, with the complexity of leverage packaged in an ETF as per mentioned in the KIID (you seem to be equating leverage with the concept of margin call, which are 2 different things).
Also you still seem to miss-out on beta slippage. The main cost of holding this ETF isn’t necessarily the expense ratio, it is rather beta slippage and the cost of rolling over derivatives which are not account for. Sticking to the expense ration as the main cost is like ignoring Contango when looking at the cost of owning an oil ETF.
QQQS.MI up 7.24% today ...
... If you have more charts and opinion let me know
Some nice healthy green in my portfolio , even on this red day , and daily volume indicates alot of interest
In fact all my short plays are in the green , bar Euro Banks but thats cos Lagarde will do anything to stay in control .
Some of these high risk (your words not mine) short ETFs made so much money for their investors during the March crash some of them were forceibly redeemed because the swap counterparty had to limit losses
If we get a trend across my short plays in the coming weeks we are off to the races , just like earlier this year.
Money doesnt just dissapear, if theres people losing money then others are making money, you just need to be on the right side of the fence for the big swings.
If things dont pan out the way I feel then just like every investment, you do due diligence, you make a decision, you make a play and you deal with the consequences.
Looks like my HTZ is in trouble .. you cant win them all .0 -
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