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Hello, this is Lazy Gae-me. Here are the rankings of foreign stock settlement amounts by domestic investors as reported in the recent news. First place is Tesla, second is a leveraged ETF called TQQ, and third is a leveraged ETF called SQQ. The fourth place, fifth, is also a 3x tracking ETF. It is truly a regrettable reality for us.
I think I can fully understand why retail investors fail to make money from stock investments. Let's look into TQQ and SQQ, which are today's topics. TQQ is an ETF designed to track the Nasdaq Back Index at 3x leverage. Although it is designed to track it at 3x, it cannot actually match three times the rate due to all sorts of added costs.
The annual expense ratio is as high as 0.86%. Conversely, SQQ is an ETF that generates 3x profit when the Nasdaq Back Index falls. Its annual expense ratio is also quite high at 0.95%. Now, let me explain why you should not trade TQQQ and SQQ using just one picture. This photo shows the prices of TQQ and SQQ after the US market closed last Friday.
TQQ rose 5.69% to $22.67. Conversely, SQQ fell 5.76% to $44.37. They track the same index. However, a difference emerged between the right move and the wrong move. Those who profited from TQQ gained a 5.69% return, while those who lost money on SQQ suffered a 5.76% loss. So where did the 0.07% difference between the two go?
Someone took it under the guise of various expenses. Does 0.07% seem small to you? Assuming there are 200 trading days a year, this amounts to a 14% annual return that has vanished. If we assume SQQ took an equal half, 7% of the investment capital has simply vanished into thin air. No matter how much you bet on a rise in the US market, you cannot overcome an annual cost of 7%.
Furthermore, we have n't even calculated the transaction fees and taxes incurred when buying and selling. With this kind of leverage, ETFs are not buying and selling spot assets, but rather buying derivatives. They link to an index when selling. Derivative products incur various costs within each individual derivative, and these costs are discreetly included in the price.
Ultimately, these leveraged ETFs are a method by which financial companies legally and gradually extort money from investors. Whether stock prices rise, fall, or stagnate, the parties that created these products never suffer a loss. This is because they simply act as intermediaries and collect their commissions.
In fact, such intermediaries exist across various industries. If you consider this in the context of investment, investing in industries that perform this intermediary role is profitable. This includes the securities industry that brokers stock trading, exchanges that mediate cryptocurrency trading, and real estate brokerages that mediate real estate transactions.
Banks also play the role of mediating savings and loans. In a sense, Google connects consumers and advertisers through platforms like YouTube and its search site, raking in hefty commissions in the middle. In a casino, while there are winners and losers in a single game, if the game is repeated thousands or tens of thousands of times, most people lose money, and the casino dealer takes all the winnings.
All of these industries are raking in the profits in their respective fields. Although this is a slight digression, when investing in stocks, [it] seeing an industry raking in the profits in this way... It is a good idea to get into the habit of looking up who the broker is. I will show you the records from the next day and the day before to see if the difference in SQQ's price fluctuations is particularly noticeable only with the phone.
Here is the index status for the next day. TQQQ fell by 2.65%, while SQQ rose by 2.59%, resulting in a difference of 0.06% between the two indices. The next photo shows the index status from the day before the first photo. This was a day when the index surged. TQQQ rose by 21.87%, while SQQQ fell by 22.01%, resulting in a difference of 0.14%.
I have also brought today's index data. It rose, and SQQQ fell by 4.06%, resulting in a difference of 0.03%. As you can see, no matter which side rises, the rate of decline is always greater for the falling side. It is regrettable that massive national wealth seems to be flowing out every day through domestic retail investors.
If you know anyone investing in TQQQ or SQQ, would you mind helping them understand this situation so they can invest wisely? Until now. I was a lazy ant. If you press Like and Subscribe, you will become rich.
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