Currently only about 1/3 of the S&P stocks are above the market average. Both SPY and TQQQ hold these in high weights. These two ETFs always hold the best stocks because the ETFs are cap weighted.

TQQQ in rising markets acts like 4 times SPY. Coming off a 20% correction in the S&P, TQQQ acts like 24 times SPY because you have 4 times as many shares as you had at the market high. The additional shares are the result of rebalancing at TQQQ prices that are 20 cents on the dollar. All of this is possible because of the high volatility of TQQQ.

The drawdown is high but there is no performance reason to not always hold TQQQ and SPY. If you are in cash because you think the market is overvalued, there is a lost opportunity cost of about 20% per year.

If there was a problem with drawdown Stars could not earn 17 times the S&P over the past 27 years. Warren Buffet doesn’t think you can beat the S&P but Stars averages twice the S&P.