Staying the Course - 3X the Pain

My $92,922 investment in 3X* ETFs is down 31.091% to $64,032.

Am I disappointed? No.

If you saw my earlier post, Prep for 2022, you already know why and how I made this year-end investment. More to the point, that post laid out my potential max losses BEFORE I made the investment. 

Revisiting the post, I guess-timated** that:

my "extreme" three month loss would be -25%; 
my one year "extreme" loss would be -53%; and
my "extreme" 3 year loss would be 89%. 

Yet, I still made the investment. 

So far, after two months, with inflation and a war, my investment is very close to my 3 month measure.

The year is not over (and neither is inflation or the war) and these losses are all made with the knowledge of the long term history of a bull market (through all prior inflations and wars) and the guess that Bogle's refrain "Stay the Course" means history will repeat and these will all recover eventually.

But I am a special case. I may never sell this and my kids may inherit this account. 

*Oddly enough, the 3X ETFs, SPXL and TQQQ have nearly exactly matched their advertised returns of 3X the SPY and QQQ, respectively. 

**These are just hypothetical drawdowns. And excuse the meaningless precision. While based on actual prices, only the general estimates make sense without any false precision. 

Disclaimer: Posts are for education only, may be subject to change without notice, and, while prepared with care, may be subject to omissions and errors. Send request to gdrahal@outlook.com to follow this blog and for additional information. 

© 2022 George Rahal

 

March to 100

 As I write, the nearby WTI Crude Oil futures contract is up neary $3 to $93 a barrel.

This is $7 shy of $100.  

In crude's 40 year NYMEX trading history it breached $100 for only 6 years, from 2008 to 2014.

Source: Barchart.com

Strangely enough, April 2020, less than 2 years ago, at the onset of Covid, the crude futures price was negative, touching minus $40 a barrel. 

Looking at the long-term, after breaching $100 and most likely much more, the outlook for mean reverting commodities-supplier greed being what it is-is more moderate price. From one acopolypse (2008 peak oil) to another (2020 post-fossil fuels), the energy markets are refunding. The geopolitics of the oil patch is flush again and may be the host of past problems revisited. 

Disclaimer: Posts are for education only, may be subject to change without notice, and, while prepared with care, may be subject to omissions and errors. Send request to gdrahal@outlook.com to follow this blog and for additional information. 

© 2021 George Rahal.