Since TQQQ is 3x the leverage of QQQ, so the conventional wisdom is:
- When TQQQ drops 34%, then it is all "wiped out" (meaning a $100 investment will go to $0 now). And TQQQ itself is also all wiped out.
However, let's say, I bought TQQQ when QQQ was at $217, and now QQQ is at $330.
So let's say, if some day, QQQ drops from $330 to $217, which is dropping 34%, should my investment in TQQQ get all wiped out? However, I can also claim that, QQQ went up and then down along that roller coaster, but my TQQQ should just go to my original purchase price.
- Or making it more drastic: I bought TQQQ on Monday, and Tuesday, QQQ went up from $217 to $330, and Wednesday, QQQ went from $330 to $217 -- dropping 34%, then my TQQQ should go back to the price of Monday only.
However, if Tom bought TQQQ on Tuesday when QQQ was $330, and then Wednesday, QQQ went from $330 to $217, then by (1) above, shouldn't the invest in TQQQ get all wiped out? (and shouldn't TQQQ itself be completely wiped out?)
Or what if on Tuesday, when QQQ is $330, I sold all my TQQQ and get $N, and use that $N to buy back TQQQ (that is like, as if I did nothing really), but then by (1) above and like Tom, my investment in TQQQ should be wiped out, but by (2) above, my investment in TQQQ should just go back to the price I bought on Monday. So these two points are contradictory. How does it work?