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The market downturn has been waiting for the city. After comparing 3x leveraged ETFs, I'm going to buy Ru immediately . Hello. This is Haruru. In a previous video, I explained that Leverage Fang Plus is difficult to time, and if you buy at a high price, your unrealized losses can reach nearly 90%, potentially leading to fatal consequences .
Therefore, as a personal opinion, I wo n't touch Levafan. I explained that I wouldn't buy Leveraged Nasdaq unless the market was in a downtrend . And now, six months after this video was released , the long-awaited market downturn has finally arrived, and the VIX index has stabilized even further. Currently, cash accounts for approximately 30% of my total assets, and I plan to invest the remaining 15% or so in underperforming assets, primarily through index funds .
Eventually, I plan to invest in a 3x leveraged ETF to take advantage of the opportunity for a sharp rise after a big decline, and in conclusion, I plan to buy a 3x leveraged ETF of the reaction index . This time, I will explain the reasons why I arrived at that conclusion. Today, I will explain things in this order.
First, let's look at some representative leveraged ETFs that were mentioned in comparison to Sol. Boom. Here is a table summarizing the four types of leveraged ETFs, SPXL TQ99FNGG. VOO is a US ETF that tracks the S&P 500 at 1x leverage. It's not leveraged, but I included it as a comparison because it's a representative index ETF .
As background information, leverage is a system that allows you to manage a large amount of capital with a small investment amount . However, these leveraged ETFs don't involve borrowing money for margin trading, as is common in FX trading or cryptocurrency trading. Instead, they work by amplifying the daily price movements by two or three times .
Therefore, as long as you hold the asset in physical form, you are not borrowing money, so even if the unrealized loss exceeds 90% and the asset value approaches zero, it will never become negative . Furthermore, there are no forced road cuts . First, SPXL is an ETF that tracks three times the daily price movement of the S&P 500 .
Looking at the cumulative return, it's nowhere near three times that of VOO . When held long-term, you'll notice that, unlike VOO, it doesn't show a consistent upward trend . This is due to the reduction and depreciation effects unique to leveraged products, which are explained in detail in this video, so I will omit further explanation here .
Please understand that leveraged products, when held long-term, can yield returns that closely align with the base index trend . Similarly, TQ99 tracks the NASDA100 daily at three times the rate, FNGG tracks the FNG Plus Index daily at twice the rate, and Sokuru tracks the Uchida Ballistic Index daily at three times the rate.
In all cases, it can be seen that these are returns with very large fluctuations up and down . If we compare the cumulative returns, my usual selection method would lead me to choose FNGGG, which has a better track record of past returns. But this time, I've chosen that item as my purchase target. I will explain, using charts, why I would choose such a poorly performing ETF .
As a premise, leveraged products have very high volatility, and their appearance can vary greatly depending on the comparison period . First, regarding the decline in the market due to the US inflation shock starting in January 2022, if you held positions just before that, meaning you bought at the peak, what you should look for is the drawdown from the highest price of the leveraged product .
If you end up with a large amount of money, FNGG will immediately incur a massive unrealized loss of approximately 90% . Furthermore, even with a firm intention to hold it long-term, holding it for three and a half years resulted in a cumulative return that significantly underperformed the S&P 500, making it appear as a high-risk, low-return investment with absolutely no advantages.
Now let's look at the opposite scenario: what happens if you buy at a low price, just before an upward trend begins? My perspective has completely changed from before; leveraged products are yielding tremendous returns, making them incredibly attractive . FNGG, which was particularly bad earlier, has seen its principal increase by 600% in just two years, meaning its assets have multiplied sevenfold .
Therefore, leveraged products carry significant unrealistic expectations if they are bought at high prices , but it can be assumed that enormous returns can be obtained if they are bought at low prices . Therefore, I buy leveraged products, which have a high probability of being acquired at a low price .
I thought this was a way to gain an initial investment quickly . With that in mind, there are currently some low-priced leveraged products available. This is the one to send. With leveraged fangs, TQ99Q, and SPXL, the risk of buying at high prices is high and it's difficult to pinpoint the right investment timing, whereas with this, it seems possible to buy at low prices.
Next, let's look at the absolute value of that stock price . As of May 7th, the stock price is around $13, a notable decline of approximately 70% in the past year . Conversely, if the price has fallen this much, it could be argued that buying now could yield significant short-term returns. The lowest price in the last 5 years here is about $7.
Since it's quite difficult to pick up the lowest price, I've placed differential orders for 100 shares at a time, starting at $11, then $10, then $9, and I'm waiting for the price to surge . However, since it is highly volatile , it is entirely possible that it could fall below the previous three lows of $7, so please be very careful about that.
If you do invest, please only do so with reserve funds that you can afford to lose, even if it means incurring significant unrealized losses . Next, let's look at the constituent stocks of the Nice Reaction Index, which is the base ETF for Sokkuru . When investing in an ETF, it's important to check what stocks it's investing in.
The welfare stocks are all representative reaction-related companies listed in the United States, and those with a high composite ratio are listed here. Looking at the charts for each company, as you can see, Broadcom and NDIA have a high weighting in terms of total capitalization and are overwhelmingly volatile, so it is estimated that they are heavily influenced by these two companies.
Therefore, if you have high expectations for the performance and future prospects of these two companies, I think they are good investment targets . While I will omit detailed investment decisions , the AI demand, data center market, autonomous driving, and robotics sectors are expected to grow even more in the future.
However, it is difficult to predict sudden, short-term declines due to geopolitical risks related to the US and China, as well as the China deep-seek shock in early 2025 . However, it is a fact that it is currently at its lowest point in the past five years, and when it did rise, it certainly had one of the strongest track records among representative US leveraged ETFs .
Based on these two facts, I expect a high success rate and will invest a small portion of my surplus funds in this way, aiming for short-term returns. Furthermore, I do n't believe this involves taking unnecessary risks. This is my portfolio as of the end of April. If I can get high returns in the short term, it will be easier to achieve my investment target return of 220,000 yen per month, and I can increase my cash ratio, reduce high-risk assets such as US Tech and Fang Plus, and increase the proportion of relatively low-risk stocks such as SCHD and Gold Fund.
Since I'm incorporating high-risk assets for an extended period, I intend to lower the risk of other stocks to maintain and adjust the overall total risk of the portfolio. Here's a summary of today's story. The performance of leveraged ETFs varies greatly depending on the timing of investment. If you bought at a high price, you may have a significant unrealized loss .
On the other hand, if you can buy at a low price, there's a chance your investment could double in a month . Among the leveraged ETFs currently on the market, Sol has recorded its lowest price in the past five years . If you have high expectations for Broadcom NIA, which is one of the top constituent stocks and has high volatility, then this could be a buying opportunity .
Sol is not an investment, but a period of entry. With that understanding, I will bet less than 500,000 yen . I am currently controlling my risk by investing most of my cash position in index funds . Furthermore, since this requires a completely different investment style from the standard long-term diversified investment in index funds, it is best to refrain from investing in individual stocks or short-term investments if you have no experience with them .
Finally, as a bonus, I'll tell you a story from the past. While this channel has recently focused on introducing index funds, it's not as if we suddenly changed our minds and started investing in high-performance stocks like those mentioned above . About 67 years ago, when investment capital was scarce, an annual return of around 10% from index funds was nowhere near enough to reach my target return, so I was trading individual Japanese stocks through day trading and swing trading .
For example, the stocks that saw profit-taking in 2019 were mostly individual Japanese stocks, as you can see here . This profit comes from a high-dividend stock swing trade, which follows the method shown in this video: buying individual stocks a few months before the ex-dividend date, selling them if the price increase before the dividend payment exceeded the dividend yield, or holding them to receive the dividend and wait for the next rise .
Also, starting in 2021, I began incorporating mutual funds to reduce risk compared to individual stocks , but the leveraged NASDAQ 100 still made up the majority of my portfolio, and I was swing trading with a 2x leveraged Nikkei 225 ETF almost every week . The reason I was doing this is because, as shown in this video, the less capital you have, the greater the risk you need to take to achieve your target return .
Therefore, I have ample experience trading individual stocks and leveraged products , and I didn't suddenly start doing this on a whim . While the leveraged ETFs introduced here are extremely high-risk investments, incorporating them into your portfolio to achieve your target return may improve investment efficiency.
However, please absolutely refrain from investing amounts that would significantly impact your life plan. If you enjoyed this video, please give it a thumbs up and subscribe to the channel! This time, I've introduced a stock that you might have been better off never knowing about. I wouldn't recommend it, but I'm going to try it in elementary school . I will report the results later . See you later!
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