I know the question of why leveraged funds (eg. SPXL 3x) are bad for long term investments has been asked a lot. I have seen general answers saying that because of daily re-balancing and volatility decay one would expect to lose money in the long term.
To convince myself I have tired getting data from daily closings from the S&P500 and multiplying by daily returns by 3x (and subtracting ~1% annual fee).
Overall since 1960 I see a 12.1% CAGR for the 3X leveraged vs 7.0% for the S&P500. And over 20y periods it performed better than the S&P for 32 of the 39 intervals.
I am not suggesting putting a whole retirement fund there, as drawdowns can be very large (e.g. -84% in 2008, -61% in 2002), but those numbers seem to contradict the idea I had read that those leveraged funds are an intrinsically bad idea in the long term.
Am I missing something here in my analysis? Or are those funds really not bad in the long term?
The Excel spreadsheet I made is here: https://drive.google.com/file/d/1836cSCd3hghhnJwkZgOWjKq3nhXb-0h8/view?usp=sharing
P.S. I have also double checked that the SPXL does behave daily as 3x the SPX. When I compare the SPXL actual yearly performance vs the one I get from my estimate the actual SPXL performs consistently slightly better.