Lemon
A-Share/HK/US Equity Commentary, Ex-HSBC Investment Banker
FNGU, a 3x leveraged long on the Magnificent Seven, loses heavily to tracking decay, making it a poor asset to hold long term. Since June 30 last year the Nasdaq has risen 17.9% while FNGU has barely moved, so a private fund that loaded up on it last year has little to show for it. x.comÂ
The Nasdaq 100 faces short-term downside because a failed push to a new high leaves crowded bullish sentiment vulnerable to a break below. Despite record institutional accumulation and a long-term bullish position, five months of chop, a failed ATH and an attempted loss of the bullish trend favor hedging rather than adding leverage. x.com x.comÂ
Leveraged ETFs such as TQQQ lose much of their promised return to decay. QQQ is up 18% this year, so a 3x product should be up 54%, but TQQQ is up only 42%; the missing 12% is decay. A 3x perpetual future captures the full 54% instead and lets traders set leverage as they want. x.comÂ
The MicroSectors FANG+ 3X leveraged ETN offers amplified exposure to Meta, Amazon, Microsoft and Alphabet heading into their earnings reports on the 29th. Buying continues until then on the expectation of a strong move after results. x.comÂ
Leveraged single-stock ETFs on Micron and SanDisk can't be held for long because decay keeps them from matching the underlying stocks' highs. When Micron and SanDisk next reach all-time highs, those ETFs won't, and the longer that takes, the further below they will be. Holders who tried to ride the wave with them are getting smoked; they shouldn't be held for more than a few days. x.comÂ
The leveraged Hims & Hers ETF is a poor long-term holding because of NAV erosion: leveraged positions are only good for short-term moves and erode returns over time. x.comÂ
NAV erosion is the problem with the leveraged Nebius ETF, in reply to a post saying it is time for NBIZ. x.comÂ
Low-cost growth ETFs can build serious wealth through exposure to the best companies and strongest trends, without managing individual stocks. A clean setup is a core of VOO or VTI, a growth tilt through SCHG, VUG or QQQM, and an aggressive tech tilt through VGT. The ranking is SCHG, VUG, QQQM, SPYG, VGT, MGK, then IWF, which is solid but costlier. Many overlap, so owning all adds little diversification, and growth-heavy funds can be hit hard by rising rates, tech selloffs or rotation to value. … Show more
Nebius's 2x leveraged ETF suffers brutal decay that can crush returns even when the call on the stock is right. Since July 1 it rose 5% while Nebius stock rose 21%, because rebalancing every day to track 2x daily returns erodes value over time. Buying the stock beats buying the leveraged ETF. x.com x.comÂ
3x leveraged ETFs like the ProShares UltraPro QQQ and Direxion Semiconductor Bull 3x are not foolproof long-term holdings and would suffer badly in a dot-com or GFC-style decline. They target 3x daily returns, and the daily leverage reset compounds losses in volatile periods. The Nasdaq one launched in 2010 at the start of a ZIRP bull market; backtested to the late 1990s it would still be underwater. A 2x software ETF holding Adobe, Microsoft and Salesforce was discontinued this April. x.comÂ
The Nasdaq-100 can fund a comfortable retirement: $1 million compounding at 15% a year, with $80,000 withdrawn annually, would leave over $2.5 million after 10 years. US markets now have more liquidity, global adoption and world-leading companies, so a long sideways stretch looks less likely than in the past, and monthly withdrawals let the rest keep compounding. A collapse of these global companies would only happen in a catastrophe like nuclear war. Past returns don't guarantee future ones. … Show more
