Anthony Terracciano-Ph.D. Comment On Regulatory Notice 22-08
Anthony Terracciano-Ph.D.
N/A
The stock market is a way to invest in the Future of the United States. Over the course of the history of the U.S. Stock market, it has trended upward. Thus on a long term time scale, the use of margin on an index tracking fund will generate higher overall returns than through pure capital allocation.
When developing my investment portfolio, I ran numerous variations of Monte-Carlo Simulations identifying the nominal expected returns across decadal time spans using various equities (SPY, QQQ, TQQQ, UPRO, AAPL, MMM, LMT, and other blue chip stocks). Unequivicoably, the simulated profile indicated the probability of being positive in real terms after 5 years was very high even when accounting for real inflation, and even interest rate hikes.
From these simulations I have applied my entire portfolio (2,600 and counting shares) to amassing TQQQ every paycheck. I am acquiring shares through a combination of limit buy and put option sales.
I have chosen this strategy as the ability of consumers to utilize leveraged ETFs provides a lower cost and overall safer experience to use margin. Additionally for investors with accounts less than $1,000,000 and nominal incomes, the cost of utilizing margin significantly reduces the nominal risk-adjusted return profile of utilizing margin. Leveraged products such as TQQQ enable the general investment community to utilize pooled resources to reduce costs associated with margin. Additionally, these leverage products reduce the ability of brokers to change margin requirements, which would enter into margin calls.
A long term hold on a 3x leveraged product such as TQQQ or UPRO is a long term bet on America.
Anthony Terracciano-Ph.D. Comment On Regulatory Notice 22-08
The stock market is a way to invest in the Future of the United States. Over the course of the history of the U.S. Stock market, it has trended upward. Thus on a long term time scale, the use of margin on an index tracking fund will generate higher overall returns than through pure capital allocation.
When developing my investment portfolio, I ran numerous variations of Monte-Carlo Simulations identifying the nominal expected returns across decadal time spans using various equities (SPY, QQQ, TQQQ, UPRO, AAPL, MMM, LMT, and other blue chip stocks). Unequivicoably, the simulated profile indicated the probability of being positive in real terms after 5 years was very high even when accounting for real inflation, and even interest rate hikes.
From these simulations I have applied my entire portfolio (2,600 and counting shares) to amassing TQQQ every paycheck. I am acquiring shares through a combination of limit buy and put option sales.
I have chosen this strategy as the ability of consumers to utilize leveraged ETFs provides a lower cost and overall safer experience to use margin. Additionally for investors with accounts less than $1,000,000 and nominal incomes, the cost of utilizing margin significantly reduces the nominal risk-adjusted return profile of utilizing margin. Leveraged products such as TQQQ enable the general investment community to utilize pooled resources to reduce costs associated with margin. Additionally, these leverage products reduce the ability of brokers to change margin requirements, which would enter into margin calls.
A long term hold on a 3x leveraged product such as TQQQ or UPRO is a long term bet on America.
Sincerely Anthony C. Terracciano, Ph.D.