SQQQ ETF Is A Good Tactical Play To Ride The Bearish Market

🌟🌟🌟Red is the colour that was predominant in the US markets on Wednesday as stocks saw the worst wipe out since 2022.  All 3 US indexes closed down with $Invesco QQQ(QQQ)$  plummeting 3.5% while $SPDR S&P 500 ETF Trust(SPY)$  dropped 2.2%.

$ProShares UltraPro Short QQQ(SQQQ)$  is up 10.7% in contrast to $ProShares UltraPro QQQ(TQQQ)$  which is down 10.7%.  

SQQQ is an ETF that seeks daily investment results that correspond to 3 times the inverse (-3x) of the daily performance of the Nasdaq 100 Index.

SQQQ helps to hedge against a decline in the markets on a short term basis.  It is not suitable for a long term hold due to its compounding nature as the results may deviate substantially.

The Magnificent 7 stocks fell today which may be caused by the earnings released by $Alphabet(GOOG)$  and Tesla that missed Wall Street 's high expectations. $NVIDIA Corp(NVDA)$  fell 6.8% too as investors were worried that the AI rally has been overplayed and is in bubble territory.

The Magnificent 7 stocks shed a combined USD 768 billion in market value, their biggest daily drop on record according to Dow Jones Market Data. 

It also did not help that Bill Dudley, former New York Fed Chief said that the Feds should cut interest rates next week to stave off a potential recession. 

Performance wise SQQQ is now up 14% in the last 5 days  but it is still down 35% year todate.    The expense ratio is SQQQ is 0.99%.  It pays dividends every 3 months.  The current dividend yield is 7.43%.

I believe that this is just a temporary setback for long term investors like me and a healthy correction for the US stocks.  In fact I bought Nvidia today as it was on sale at USD 115.00 which is a great price considering it went up as high as USD 140.76 not so long ago. 

I like SQQQ as it is a lot simpler than dealing with the complexities of Options Trading. I cannot lose more than what I originally invest whereas in Options, the losses maybe more. 

There is no right or wrong in investing, just what suits each person's goals and risk appetite.  I view the current market correction today as a unprecedented opportunity to buy wonderful stocks like Nvidia at a great price and hold long term.  I know my future self will thank me.  The stock market rewards those who are patient and spend time in the market. 

As Warren Buffett likes to say When there is fear in the markets it is time to be greedy. 

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