Just buying NASDAQ 100 ETF (QQ) can no longer satisfy the pursuit of returns by retail investors, who flock to products with higher leverage, greater risk and less hedging, including call options and multi-leverage ETFs.
In the past six months, with the unprecedented liquidity release of the Federal Reserve and full confidence in the "bottom" of the Federal Reserve, a large number of young retail investors in the United States poured into the stock market and began to play a decisive role in the market trend.
According to OCC data, retail investors are likely to occupy a majority share in all call option transactions. At present, retail investors have accounted for 45% of the transactions, compared with less than 30% at the beginning of the year.
Compared with institutional investors, retail investors will prefer TQQQ and other products because of their radical investment methods and fanatical investment sentiment.
Before the correction of US stocks in September, TQQQ had just experienced a considerable inflow of funds, and even set a historical record of $762 million per week. According to Bloomberg's data, TQQQ, which was originally $7.8 billion, has attracted more than $654.38+05 billion in the past eight days. TQQQ's recent trading volume has also greatly exceeded other popular ETFs.
According to a report by Bloomberg earlier this month, on Robinhood, a well-known American retail trading platform, 24,000 accounts purchased TQQQ, ranking 20th in the ETF. Among Fidelity's customers, TQQQ ranks sixth among the most popular products.
TQQQ is an ETF index fund issued by Proshares in 20 10, which tracks the Nasdaq 100 index and provides triple leverage in one day. Since its release, TQQ has provided rich returns for investors. Before the Nasdaq callback last week, TQQ's return rate in this decade exceeded 100 times. Even after this callback, TQQQ's return rate is still around 84 times.
In contrast, the ETF(SQQQ) with triple leverage shorting Nasdaq has plunged by 99.98% since the issuance of 20 10, and experienced the largest capital outflow since March last week.
However, high returns often mean high risks. The problem with multiple leverage is that a big retracement will erase all the gains over a long period of time. For example, in this callback, the Nasdaq fell by about 10%, and TQQQ fell by about 30%, erasing the increase in the past month.
In addition, TQQQ was issued on 20 10, which is the initial stage of this economic cycle expansion, and the price has been rising all the way up to now. However, if we look back at the internet bubble in 2000 and the financial crisis in 2008, Nasdaq fell by 77% and 54% respectively in these two stock market crashes, and it was not until more than a decade later that it recovered to the level before the stock market crash. Ten years later, the American economy has reached the final stage, and the stock market is at a very high level. Once the stock market experiences another plunge, TQQQ will cause unprecedented heavy losses to investors.
At present, the role of retail investors in the American stock market also determines that the market trend may switch at an extremely fast speed. For example, in this round of adjustment, on September 4th, a large number of Robinhood investors poured into SQQQ with triple leverage, and their mood changed rapidly. This speculative style of "have it both ways" will add fuel to the fire when the market rises, but it will also expand the panic when the market falls, and accelerate the speed and scale of the market crash.