Great performance produces periods of drawdown. If you want no drawdown, your performance is limited to about 8% per year. Stars 26 year performance is 21% per year. Drawdown for Stars in major corrections is 43 – 67%.

Can you have good performance without drawdowns? No. The S&P has drawdowns of 20 – 40% about every 6 years. 10% drawdown occurs every two years. If you are buy and hold, you need to be able to handle drawdown. You can not be of the mindset that panics and sells at major lows. Typically as performance increases so does drawdown.

Stars benefits enormously from drawdown. TQQQ has an average annual volatility of 4. In a 20% S&P correction, TQQQ falls 80%. This reduces the price of additional shares to 20 cents on the dollar. At a correction low rebalancing increases the shares of TQQQ to 4 times the amount at the previous market high.

In a rising market TQQQ acts like 4 SPY. Coming off a correction low TQQQ acts like 24 SPY because the TQQQ volatility explodes to 5 – 8. Everyone wants to own the best stocks. When a correction low occurs near year end, buying TQQQ is a great investment.