TQQQ vs QQQ: What Happens When You Hold 3x Leverage Long Term?
MONEY · BACKTEST · POSSIBLY TOO MUCH SPREADSHEET ENERGY
I wanted to answer a very normal question: what happens if you take QQQ, give it roughly three times the daily exposure, and then hold on for dear life? Naturally, I responded by building a 26-year backtest. Because apparently this is what I do for fun now.
QQQ vs TQQQ
QQQ is basically a basket of 100 of the biggest non-financial companies listed on the Nasdaq. Think Microsoft, Apple, Nvidia, Amazon — the usual suspects that somehow end up in half of our retirement accounts anyway.
TQQQ aims for roughly 3× the daily move of the Nasdaq-100. If the index goes up 1% today, TQQQ is shooting for around +3%. If it drops 1%, well… congratulations, you have discovered that leverage also works on the way down.
The important word there is daily.
| QQQ | TQQQ | |
|---|---|---|
| Target exposure | 1× Nasdaq-100 | 3× daily Nasdaq-100 |
| Leverage | No | Yes |
| Daily reset | No | Yes |
| Emotional cardio | Moderate | Potentially elite |
How I built the backtest
TQQQ launched in 2010, which creates a problem: you can’t just download TQQQ prices from 2000 because those prices do not exist. So instead of pretending they do, I built a few hypothetical 3× models and made the assumptions visible.
The optimistic one. It gives you daily 3× exposure and subtracts the fund fee, while basically pretending the extra leverage can be financed by a very generous imaginary uncle.
More realistic. It subtracts a financing cost for the extra exposure using the effective federal funds rate as a proxy.
This is the one I use for the headline results. It starts with the cost-aware model, then adjusts it using the average tracking difference observed versus actual TQQQ after 2010.
This still isn’t a time machine. Pre-2010 TQQQ results are simulations, not actual fund returns. The backtest also excludes taxes, commissions, bid/ask spreads, liquidity stress, market impact, and the very real chance that a human being panic-sells at exactly the wrong moment.
What happened to $10,000
I deliberately started at the dot-com peak — basically the worst party invitation imaginable. QQQ got wrecked, but eventually recovered. The hypothetical 3× strategy got wrecked, then wrecked again, then spent years lying on the floor asking for water.
What $10,000 became
QQQ vs. a calibrated hypothetical 3× daily Nasdaq strategy, starting March 27, 2000.
| Metric | QQQ | Hypothetical 3× |
|---|---|---|
| Ending value | $72,206 | $2,695 |
| CAGR | 7.77% | -4.84% |
| Max drawdown | -82.96% | -99.98% |
| Longest underwater | 14.90 years | 26.42 years |
| Recovery from max drawdown | Feb. 20, 2015 | Not recovered by Aug. 2026 |
That is the part of leveraged-ETF conversations that gets lost when someone screenshots the last ten years and says, “bro, just buy TQQQ.” Starting point is not a footnote. It can be the whole movie.
The drawdown
An ending balance is nice, but it hides the experience of actually owning the thing. So I calculated how far each portfolio sat below its previous high over time.
QQQ fell about 83%. The main 3× estimate fell about 99.98%.
How far underwater were you?
Monthly points from the same dot-com-peak backtest.
But what if we DCA?
This was the part I found genuinely interesting. A lump sum at the dot-com peak was a disaster for the hypothetical 3× strategy. But most normal people don’t invest one pile of money in March 2000 and then disappear into the woods for 26 years.
So I tested a more realistic habit: $500 invested every month. Total contributions came to $159,000.
Volatility decay sounds scarier than it is to explain
Suppose an index starts at 100, goes up 10%, then falls 9.09%. It ends back at 100.
Now imagine a perfect 3× daily version. It goes up 30% on day one, then falls about 27.27% on day two. It does not get back to where it started.
Regular index: 100 → 110 → 100
3× daily: 100 → 130 → about 94.55
That gap is the basic idea behind volatility drag. When the market chops violently up and down, daily resetting can slowly nibble at the leveraged portfolio. Death by a thousand percentage points.
Can you actually hold TQQQ long term?
Yes. The brokerage app will not physically stop you.
The more useful question is whether you can tolerate what “long term” can actually look like. In this dot-com-start simulation, the main 3× estimate had a maximum drawdown of about 99.98% and still had not recovered that old peak by August 2026.
On the other hand, the monthly-DCA test produced a completely different result because fresh money kept buying through the collapse. That’s why I don’t think “TQQQ good” or “TQQQ bad” is a very interesting conclusion. The answer depends heavily on when you start, how you invest, and what you are capable of sitting through without doing something stupid. I include myself in that last category.
Final Note
One more thing.. the DCA strategy assumes that the fund never actually closes when it goes belly up! This is a dangerous assumption. In practice, when a fund loses 99% of its value, it wouldn’t just magically continue selling you shares of its ETF. So keep that in mind when investing in leveraged ETFs.