It has been found that everyone has questions about why there is wear and tear with triple leverage.

For example, the Nasdaq is in a long bull market, but TQQQ has not outperformed QQQ over three years; similarly, this year is a bull market for semiconductors, but SOXL has not outperformed SOXX over one year.

Let's do a simple calculation to understand.

Day 1, Day 2, Day 3, Day 4, Day 5, Day 6

One times: +10% -5% +8% -10% +5% -8%

Three times long: +30% -15% +24% -30% +15% -24%

Three times short: -30% +15% -24% +30% -15% +24%

Returns

One times 100*1.1*0.95*1.08*0.9*1.05*0.92=98.12

Three times long 100*1.3*0.85*1.24*0.7*1.15*0.76=83.83

Three times short 100*0.7*1.15*0.76*1.3*0.85*1.24=83.83

Conclusion: As long as the tracked asset does not experience a prolonged one-sided rise or fall, both three times long and three times short are likely to underperform the tracked asset in the end.

$Invesco QQQ Trust(QQQ.US)$iShares Semiconductor ETF(SOXX.US)$Proshares UltraPro QQQ(TQQQ.US)