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SQQQ: A Solid Hedging ETF For A More Volatile Market

Apr. 01, 2022 10:43 AM ETProShares UltraPro Short QQQ ETF (SQQQ)6 Comments
Hale Stewart profile picture
Hale Stewart


  • The markets' tone has clearly changed.
  • The possibility of a recession is increasing.
  • The SQQQ provides investors with a strong downside hedging capability.

Bull and Bear Symbol with Stock Market Concept.

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Investment thesis: The (NASDAQ:SQQQ) offers investors a solid hedging option for portfolios that are primarily comprised of broad-exposure ETFs.

At the beginning of the year, the overall tone of the market changed. The 6-month charts illustrate this

This article was written by

Hale Stewart profile picture
Hale Stewart spent 5 years as a bond broker in the late 1990s before returning to law school in the early 2000s. He is currently a tax lawyer in Houston, Texas. He has an LLM in domestic and international taxation (MagnaCumLaude). He is the author of the book The Lifetime Income Security Solution. Follow me on Twitter at @originalbonddadYou can read his legal analysis on his law office's blog.

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (6)

greymacro profile picture
SQQQ is not great (at all) as a long or even medium term hedge. The mathematics of the thing mean that "decay" is mathematically *certain*. Perhaps for short term purposes, it could be useful..
this is not a hold and wait for the crash. at best it is an overnight or one week hold at most. been there and got the t shirt of learning with some scars.
Joseph the Value Guy profile picture
Definitely not a consensus view. and the piece i guess isn’t very persuasive (maybe it isn’t trying to be). Still Thanks for your view/article!
Like SARK, sometimes when every investment one has in his portfolio is somewhat positively correlated, ie going the same direction - look closely and critically - it is the case for the most, he may consider include those reverse ETFs, in a tactical way, ie not hold and forget. It is going to be tricky for investors, and I own both.
sandimas profile picture
Be careful with SQQQ. Any sizable allocation will essentially prevent your portfolio from growing if this was just a run-of-the-mill market correction. SQQQ is also not intended as a long-term hedge, merely a daily or few days to hedge. Good luck.
FlameHawk profile picture
Spot on. Park cash here and be prepared to watch your investment evaporate over time. This is a short term play ONLY. Got a few scars to prove it...
@FlameHawk Why does it evaporate?
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