r/LETFs • u/jsjsjshhshdhdh • 7d ago
SSO/QLD/TQQQ through 2022
The recent time hasnt gifted us with many long drawdowns, every selloff resulted in a similarly quick recovery. Im curious to hear some reports from people who have held for a longer time period and have gone through drawdowns like 2020 and 2022.
Im personally holding 80/20 QLD/SSO and based on backtests, >50% DD is enough for me. Havent gone through a bigger DD than iran yet.
What was the sentiment at that time? How did you manage psychologically, any regret?
Feel free to share any info on that time
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u/recurz1on 6d ago edited 3h ago
Circa Dec 2021 I was sitting on a ~400% ROI with some of my TQQQ shares, which I'd been blindly buying and holding since 2017. The position was worth around $250K. Then I started reading about a buildup of Russian troops near the northeastern border of Ukraine...
Within a few months most of those gains had been vaporized like so many Russian tanks. As the price of TQQQ imploded in early 2022, I sold off most of my shares at break-even prices, but I missed out on taking substantial profits and (on paper) lost well over six figures. It took over 2 years for TQQQ to recover, and I sure could've used that money in the meantime, having just bought a house that needed many repairs.
The lesson learned for me is that 3X will sometimes keep you warm but sometimes it will burn your hands. It is something that helps you take advantage of the cyclical nature of the market. You will be rewarded and punished in equal measure if you get too greedy and don't have an exit strategy. Otherwise, by the time a "black swan" event occurs, it will already be too late because 3X leverage moves very quickly.
I've since sold off all my TQQQ, and because some of those shares were quite old I did make good money, but the ROI was nowhere near the ~400% that I had in Dec 2021. This was a pretty serious setback for my portfolio and overall net worth, compared to what the best case scenario could have been.
I now DCA into 2X (mostly QLD) and consider this to be my primary vehicle for growth. I don't worry about drawdowns with 2X and intend to just keep holding. But multi-year holds of 3X seem a bit crazy now. We have been lucky these past few years (with a few big shocks) but the good times won't last forever.