Leverage & Regret

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My uncle, bless his heart, once tried to explain leveraged ETFs to me over a plate of lukewarm shrimp scampi. He’d just “tripled his money” on something called SPXL, and was practically vibrating with self-satisfaction. It sounded… precarious. Like balancing a stack of porcelain plates while riding a unicycle. I nodded, feigning understanding, and silently added “financial literacy” to my ever-growing list of personal failings.

These things—the Direxion Daily S&P 500 Bull 3X Shares and the ProShares Ultra QQQ—are, essentially, a way to amplify both gains and losses. It’s like taking a perfectly good recipe and adding three times the amount of chili powder. Sometimes it’s brilliant. More often, it’s a desperate scramble for milk. The SPXL promises three times the daily return of the S&P 500, while the QQQ—a slightly more tech-obsessed cousin—aims for double the daily performance of the Nasdaq-100. Which, let’s be honest, feels less like investing and more like a high-stakes game of chance.

Here’s the dry stuff, for those who haven’t spent the last decade avoiding financial news: SPXL has an expense ratio of 0.93%, QLD clocks in at 0.98%. QLD manages a slightly larger pile of other people’s money—$10.7 billion versus SPXL’s $5.9 billion. I’m not sure what that says about anyone, but I suspect it’s not good.

Metric SPXL QLD
Issuer Direxion ProShares
Expense ratio 0.93% 0.98%
1-yr return (as of 2026-01-30) 24.6% 27.6%
Dividend yield 0.7% 0.2%
Beta 3.09 2.34
AUM $5.9 billion $10.7 billion

Beta, they explain, measures volatility. As if volatility needs measuring. You feel it in your teeth.

QLD, the slightly more expensive option, offers a lower dividend yield. SPXL, on the other hand, is a bit more generous with its payouts. It’s the difference between a lukewarm handshake and a slightly warmer one. Not exactly life-altering.

The performance numbers are… impressive. A five-year growth of $1,000 into $3,127 with SPXL, $2,370 with QLD. But then you look at the maximum drawdown—a stomach-churning -63.84% for SPXL, -63.78% for QLD. It’s like riding a rollercoaster designed by someone who actively dislikes joy.

Inside QLD, you’ll find a heavy concentration of tech companies—Nvidia, Apple, Microsoft. SPXL, while still tech-heavy, offers a bit more diversification. But ultimately, it’s still a bet on the same handful of companies. Which, in my experience, feels less like investing and more like waiting for the inevitable bubble to burst.

These funds, like all leveraged ETFs, have a quirk. A daily reset. It sounds technical, and it is, but essentially it means that long-term returns can deviate wildly from expectations. It’s like trying to build a sandcastle during a hurricane. You might get a few good moments, but ultimately, it’s going to wash away.

So, what does it all mean? Well, if you’re a risk-tolerant trader with a short-term horizon, these ETFs might be worth a look. But if you’re like me—someone who prefers a slow, steady path to financial security—I’d suggest sticking to something a little less… volatile. Like stamp collecting. Or maybe just hiding the money under your mattress. At least then you know where it is.

These ETFs have done remarkably well recently, fueled by a particularly exuberant bull market. But as any seasoned observer knows, bull markets don’t last forever. Valuations are high, and the potential for a correction is real. A little caution, in my opinion, is warranted.

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2026-02-03 18:04