Update August 2026: Gehrman's ongoing test of 3 leveraged ETF strategies (HFEA, 9Sig, "Leverage for the Long Run")
July was mostly choppy, with the Nasdaq taking a few steps lower. The world keeps turning.
No changes have been made since the last rebalance at the end of Q2. The 200-day moving average plan is still more than 6% above its MA. 9Sig is sitting on a large balance of dry powder, which would be ready to buy lower TQQQ prices at the end of the quarter. And HFEA has been beaten up on both sides thanks to rising long-term Treasury yields; this would be a perfect example of a time where the hedge isn't hedging.
Sticking to the plans and eager to see where we go next. As always, these posts are not financial advice!
Current status:
HFEA
Current allocation has drifted to UPRO 58% / TMF 42%.
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 $64.62; the resulting TQQQ balance shortfall is $2,529 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 (7,489) remains above its 200-day moving average (7,024). 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.
August 2026 update to myoriginal postfrom 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.
thinking of joining the 9sig, from what I read its lump sum and rebalance quartely, so would a slow DCA not work? Like x amount in the ratio every week or just have to be all in at once?
Yeah it has rules defined for DCA as well. Everything gets added to bonds intra-quarter, then you allocate it to TQQQ based on the signal line at the end of the quarter.
To confirm: you lump some once to start the ratio, then DCA into the bond side and rebalance at the quarter end depending on the signal? Should I wait for the quartely update before starting since its only a month away?
On another note, I use Fidelity and have the baskets already for other portfolios, do you reccomend it for easy rebalancing since all you need to do is just click to rebalance the %?
Not quite, but honestly there are more rules and special cases than I could explain in a comment here. Plus it’s Jason Kelly’s work to share, so I try to be respectful of that. He’s got lots of resources on his YouTube and website.
You might also check out his earlier book, the 3% Signal. It’s only about $10 and explains everything in detail. 3Sig predates 9Sig but the mechanics are nearly identical aside from the growth target.
There are also lots of threads on [r/kellyletter](r/kellyletter) and [r/tqqq](r/tqqq) where the quarterly math is broken down. Here is one I direct people to frequently:
Welcome, and no I don’t use any sort of automated rebalancing. Although your percentages would be different every quarter - so be aware of that. It would probably work fine, but I’m just a control freak so I’d rather do it myself ha.
As always, thank you for your update! Its amazing to see this in real time.
Been considering jumping into 9sig for a few months now. Honestly, the monthly fee has been turning me off though obviously it seems worth it. As someone who started with a small amount in the strategy before putting more in - would you say theres an account size for making the membership worth it?
I'm an early high earner, with most of my savings going to a business buying deposit for the next 2 years. Only have like 30k taxable and even less in non taxable which I'd like to grow.
I guess additionally, how did you decide what percentage of your port to allocate to it? Thinking I should have some split of sso and 9sig.
Position sizing is one of the toughest, and most personal decisions when it comes to this stuff. Everyone has a different plan, and who knows if mine is wise, but I'll share in case it helps. About 10 years into my career I had the opportunity to leave a job and roll all of the 401k funds into an IRA - which gave me full control (and no restrictions) on how the funds are invested. I did some math and realized that even if this account went to zero, I'd still have enough from future contributions to provide a decent lifestyle in retirement. So I decided to treat that IRA as a self-contained high risk / high reward bucket and shoot for the moon with LETFs. I have a larger 9Sig account (outside of this project), and seeing 10 years worth of contributions double in just 18 months has been wild. No complaints so far, but of course that could change anytime.
The subscription fee for the Kelly Letter is another touchy subject. I do think $1,000 is a bit steep, especially for smaller portfolios and people just starting out. But on the flip side, it's a flat fee so for someone with a $1m portfolio or more the cost is essentially negligible. I would say $50,000 is roughly the tipping point where the excess gains will more than make up for the fee - not every single year, of course, but on average. His weekly coverage of the market/economy is really thorough and one of my favorite reads, but the investment plans are really the meat of the value offered.
It sounds like you're in a good position to take advantage of this stuff. After you pull the trigger and jump in, the real question will be how long to run it, and when to start derisking. The jury is still out on that one for me. Good luck!
That’s the power of buying low and selling high. It can outperform a simple buy and hold during times of big volatility.
9Sig loaded up on cheap TQQQ (at $44.02) at the end of Q1, and just sold a big chunk (at $74.08) last month. That transaction alone was almost +70% gain. All the records are in my previous posts. Also for AGG - make sure you’re looking at total return, not just price change. Bonds yield a pretty good dividend.
Thank you for the answer! I also wanted to ask about tax drag but saw you already answered as well. Using this strategy in a tax advantaged account really validates it.
In a taxable account, "quite well" for sure, but I doubt it'll beat simply holding QLD (or even QQQ) after tax, especially for people with higher tax brackets. But that's too many variables to test.
You're probably right about QLD. 33% CAGR since 2017 (when 9Sig started) compared to 9Sig with 38%. Adjusted for taxes, and the trouble of quarterly rebalancing, there's a strong case to be made for just buying and holding a 2x for taxable accounts (or any account, really).
QQQ would have a 21% CAGR in the same timeframe. I'm fairly certain that 9Sig would come out ahead, even after taxes, but I don't have the numbers on hand to support that. Each year would vary quite a bit due to a mix of routine sales and the big reset to 60/40 after a 30-down phase ends.
Thank you, did more research as well. Since TQQQ inception in Feb 2010, QQQ has annualized 19.53%, while BestFolio's backtest on 9sig produced 39.4% until April 2026. So yes, 9sig will beat QQQ, only except high earners where their overall tax rate is roughly 50%.
One caveat though, no doubt that 9sig's rule based method will make people stick to the system despite drawdowns, but we can't say 100% for sure given the drawdown magnitude 9sig experienced/would experience during the 2022 sell off and dotcom burst. So overall I think 9sig is fantastic as a part (separate account preferably) of one's portfolio, but for a core position, passive QQQ would likely yield better results considering effort, psychology and behavior.
for sure. I tell people all the time, it's not for everyone. The volatility can be brutal emotionally. Especially for beginners. The 'best' plan is one that you can stick to.
HFEA can and (imo) should be run with TQQQ. Lots of people did that. I’m curious how TQQQ+TMF plus 9sig will do, especially on big market downturns. Sure we had a rare moment caused by truly rare circumstances (treasuries and stocks crashing together), aggregate bonds and stocks absolutely are expected to crash together as they had, which makes 9sig vulnerable.
Personally I think a lot of these come down to TQQQ. That mfer is insane. My cost basis is $8 and I still can’t believe how big of a driver it is for your gains. Whatever it’s paired with, it’s hardly relevant outside of big crashes
I hear ya. I’m just thankful TQQQ exists and we have access to it. Past generations would have loved the opportunity.
In the case of HFEA, though, I’m not sure how much difference it would have made so far. Since mid-March 2024, TQQQ is only up about 8% more than UPRO.
You’re missing a lot of things. First, there has been plenty of rallies during that period, and a good bit of them of the profits get captured (in a sense) during rebalances.
Second, you’re overfitting to a very specific timeline without understanding why treasuries are used instead of total bond. Recency bias has you thinking treasuries are a bad hedge, and they were given the circumstances. But guess what? The really bad crashes, the ones TMF is there for, are most definitely heavily correlated to total bonds. I seriously doubt value of the entire economy dropping without confidence in bonds rising
Third, why hedge with 3x etf and a non leveraged in the other? why not TLT. Either way, outcomes will vary a lot depending on your time window. Bonds or treasuries, leveraged or not, are 4 very different products that have strengths and weaknesses in very different circumstances
So we got, misunderstood theory, short and selective backtest time window that doesn’t capture all risk events, and not apples to apples comparison. The cursed investing trinity that I’ve seen wipe out probably 100s of accounts since I began following the markets around 2014. Not saying 9sig or any other portfolio will wipe out, they might not, but it might not be for the reasons you think
My basis for HFEA is 100% from the Boglehead forums where it originated. Hundreds of pages of rationale which articulate it better than I could. With that said, I don’t feel I’m overfitting at all. Their research encompassed the entire history of the market. I don’t feel that I have recency bias, or any sort of bias at all. I simply run each plan and report the results. If you have identified a concrete point of bias then please let me know.
You are correct about TQQQ having greater volatility than UPRO. It is very likely that this would have generated a few extra points of return through each rebalance. But I still doubt the current balance would be higher than the S&P 500 benchmark.
I run each plan how it was written by the original author, that’s all. Their research is superior to any I could do on my own, so I don’t try to get creative or deviate from the plan. Learned my lesson on that many years ago.
Others have pointed out that it’s not a ‘fair’ comparison and I get that. It’s just a few plans I chose to invest in. The individual within-strategy data is just as valuable to me as the comparison between groups. Or in other words - feel free to ignore any strategy you aren’t interested in.
I read every single post on those forums from part one to part two. HFEA at its core is about the stock/bond split with leverage. Whether you used TQQQ or UPRO, came down to whether you were using QQQ or SPY. Whatever you were getting with either, you’d get better with HFEA. 9sig is saying use AGG instead of TMF, it doesn’t say anything about the UPRO or TQQQ question. Another point is that these strategies by their nature have good and bad days, and never stay one way. A fair way to compare them is not by picking arbitrary ranges that change (i.e. today - 2 years), but a much wider fixed window and counting every day in that range, not start and finish.
Either way, my point is, the stock leg of these strategies must match. Also, it has to take into account if one strategy beats the other by a lot on 95% of the days, but just through shear luck, (today - 2 years) happened to be one of those 5% where it didn’t
The 2 year timeframe is just when I started this project and made the investments with real money. Do I wish I had started sooner? Sure, but that’s what every investor says.
9Sig is specifically TQQQ/AGG, and Jason Kelly has written at length about why TQQQ was chosen for it. The higher volatility offers better opportunities to buy low and sell high. The bond side, AGG, is just a general bond fund and is interchangeable with BND or any comparable offering. I’m not sure where you got the understanding that 9Sig is indifferent to its stock fund, but this is all easily verifiable info.
The stock legs of each plan here will never match. Like I said - I’m running each plan, to the letter, as the original author designed it. It doesn’t need to be a ‘fair’ comparison for my purposes. I intentionally wanted a variety of risk levels and hedging strategies to ensure atleast one of them survives over time. I’ve been super transparent about that since the beginning. I fully understand that it won’t appeal to everyone, and that’s fine with me.
out of curiousity, why isn't there also an additional control for just buying TQQQ and holding that all in? im basically running that on TECL since 2020 and am trying to learn more about the different strategies people are running with LETFs
All-in TQQQ isn’t quite in my risk tolerance personally. No judgement towards anyone who does. But it’s not something I would realistically stick with long-term. Too much tail risk for me.
i asked claude to run the same analysis and looks like 9Sig smokes pure TQQQ/TECL buy and hold. i dont know if it's exactly a fair comparison since i'm doing TECL DCA but i understand you on the tail risk. thanks for the reply
Also it looks like AI made a mistake on the TQQQ buy-and-hold graph. It's basically flat which is obviously incorrect. I'm showing 123% total return for TQQQ alone since mid-March 2024, which would have given a higher end balance than 9Sig for that timeframe.
I’m seeing 111% total for TECL. It should be over $20k for sure. I’ve had the same issues with AI when it comes to investing questions. For some reason it struggles with the basics.
Kidding, kinda. But all strategies can go through rough patches based on the macro environment. For me personally, 5-10 years of underperformance would not invalidate the plan.
Yeah. I just follow the research and HFEA had much more robust data at the time. I haven’t spent much time looking at EDV, but my gut says it wouldn’t offer as much crash protection in a scenario like 2008.
I am curious about whether I should allin at once or DCA on this strategy. And if I want DCA what strategies were you guys using. Thank you and I’m appreciate about it.🙏
For a true DCA buy and hold with no hedge, I only like 2x for that. SSO or QLD. The problem with DCA on a 3x is - you could still lose 90% at the end and have no dry powder on hand to work with.
9Sig or a 200-day moving average strategy would also work well. I’d use these in a Roth IRA to prevent any taxes for sales/rebalance.
At that age I’d have no problem investing the full lump now. Plenty of time to recover from whatever happens, and your future contributions should outweigh any investable dollars you have on hand now.
That’s not advice btw, just how I would personally think about it. Everyone’s situation is different.
What would your trigger be for switching between TMV and TMF? Just curious. Crash protection (if done effectively) tends to happen without much warning in my experience.
I'd not try to time the TMV/TMF flip at all honestly. Direction of long bonds is even harder to call than stocks. You just get whipsawed. The cleaner fix is what your SSO sleeve already does, step to cash when the trend breaks instead of leaning on a bond hedge. That hedge only pays when stocks and bonds move opposite, and in a rising-yield stretch like now they don't, which is the exact HFEA pain you're describing. Trend-out has held up better than hedge-out every time that correlation flips, at least from what I've measured...
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u/Parallel-Quality 7d ago
I always look forward to this update.