Question

If your client is interested in getting inverse triple exposure to the NASDAQ 100 index for a one-year investment horizon, would you recommend SQQQ to your client? Why or why not? If your client is interested in getting inverse triple exposure to the NASDAQ 100 index for just one trading day, would you recommend SQQQ to your client? Why or why not?

Table 6 Target Multiple Daily RD Mean Daily RD Std Dev Monthly RD Mean Monthly RD Std Dev Annual RD Mean Annual RD Std Dev QQQ 1.00 -0.001% 0.05% -0.02% 0.08% -0.24% 0.06% QLD 2.00 -0.010% 0.08% -0.26% 0.36% -1.90% 5.71% TQQQ 3.00 -0.017% 0.15% -0.46% PSQ -1.00 0.005% 0.05% 0.05% 0.31% 0.55% 5.18% QID -2.00 0.009% 0.09% 0.04% 0.87% 2.29% 14.34% SQQQ -3.00 0.013% 0.15% -0.04% 1.68% 4.99% 26.56% 0.95% -2.13% 17.67%

Answer 1

SQQQ is an 3x inverse-leveraged exchange traded fund.

It is designed for short-term, high-risk and high- reward gains in the event of NASDAQ 100 crash.

It attempts to produce a daily investment return that is roughly opposite and three times the daily performance of NASDAQ 100.

It has a high expense ratio.

Therefore it is not suitable for long term holds.

It is not a buy and hold ETF.

Therefore iit can not be recommend to a client having one-year investment horizon.

However it can be recommended to a client who requires just one-trading day exposure.