Posted on 12/05/2021 6:17:36 AM PST by zeestephen
Nasdaq 100 (QQQ) started pulling away from the pack when Trump was elected. Since January 2020, the start of Covid, QQQ has gone parabolic. QQQ is up almost 600% in ten years. SPY is up 260%. DIA is up 190%.
(Excerpt) Read more at bigcharts.marketwatch.com ...
Interesting.
So, going forward, will QQQ be a better investment, or is it going to “revert to the mean”? The trend is a very fickle friend.
I read 4 stocks were responsible for most of the gain…
Check.
But maybe the question is whether that will continue.
PS - these gains are dwarfed by crypto gains in just 3-4 years…
how many QQQ stocks of 10 years ago are still part of QQQ today?
Crypto market cap shed more than 600 billion since November 10.
It shed 300 billion since Dec 3.
https://coinmarketcap.com/charts/
It will more than likely go up and set new highs.
Yes, big tech has been taking off.
The Invesco QQQ ETF is an index of the NADAQ 100.
It is over-weighted in technology stocks (48.21%).
That sector, technology, represents 9 of the top ten pieces of the QQQ (NASDAQ 100), with Tesla being the one non tech company in that list:
Invesco QQQ ETF Top Holdings
Stock Share of QQQ
Apple (AAPL) 13.39%
Microsoft (MSFT) 10.76%
Amazon (AMZN) 10.66%
Facebook A Shares (FB) 4.26%
Tesla Motors (TSLA) 3.45%
Alphabet A Shares (GOOGL) 3.42%
Alphabet C Shares (GOOG) 3.31%
NVIDIA (NVDA) 2.88%
Adobe Systems (ADBE) 2.03%
PayPal (PYPL) 1.99%
Here is some more to be said about QQQ.
https://www.investopedia.com/ask/answers/061715/what-qqq-etf.asp
For the long term and with knowing in the long term major use of the capital invested may become needed or if not needed just left to heirs, it is best to keep a portfolio not weighted too much in any one direction and whether using individual stocks or stock index funds to have a wide universe of holdings represented - not to be caught with too much of the portfolio in a trough at any one time - at any time.
Use any excess gains as the only capital to take the bigger risks with, preserving most of the capital in a broad based portfolio.
Bitcoin has crashed 20% in the last two days.
Trading at $48,500 as I write this.
“The trend is a very fickle friend.”
Well said.
Marty Zweig used to say “The trend is your friend.”
The worst investment I ever made was in an Invesco high tech mutual fund. It had gone up and up and up, and I wanted some of that action, even if belatedly. I lost all the money I invested. I’ve seen Invesco TV ads recently. Not me!
Looking up Marty’s quote, I found another:
“The trend is your friend except at the end where it bends.”
Frankly, I find your words more succinct.
Google, Apple, Amazon, Microsoft - all above $1.7 trillion in market cap, even after two weeks of heavy selling.
Nvidia and Facebook both went public in 2012 - I think they are the next two largest - NVDA around $750 billion - FB around $850 billion.
Nvidia specializes in gaming and heavy visual chips.
Using that chart you are looking at the perceived value of innovation. I invest very little in that arena but there’s a reason it has outrun the other parts of the market. The potential returns of innovation are unlimited.
Stock investors get to decide what price represents value on any given day. When they are wrong they pay the price.
Meanwhile people who don’t invest yammer constantly about the “lack of value” in stocks in general and particular. Why do they even care? Because they are Jealous that someone might make money by investing in innovation.
Sure. Now you tell me.
Yes, it is undergoing a correction.
It has also tripled every year for 11 years, intermixed with corrections.
Crypto has regular corrections, like all assets.
Oil was slaughtered for years.
But the returns on crypto are huge.
As an example...
Shiba was up 62 million (!) percent last year.
Yes, exactly.
One of my favorite statistical forecasting tools is the James Stein estimator. It basically says that everything does move toward the mean.
If you look at “natural” systems you will often see logistic curves where things grow exponentially at the start and then pass a transition point where their grown starts to slow.
One can argue that the stock market is not a “natural system.” Far to often the stock market is influenced by politically caused events, whether it is inflation, wars, price controls, or Federal Reserve Board actions.
Similarly, when one does traditional Monte Carlo analysis of a stock portfolio based on a selection of “past years” on is saying that the “mean” influences the projection of the future. The problem is that each of the past years values are not independent nor equally probable, as is assumed by Monte Carol analysis.
Bitcoin has crashed 20% in the last two days.
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Two points: with the US, China, Russia, Canada, England, and other countries currently developing cashless, ( digital money), doesn’t anyone think they will NOT allow competition to their currencies? They will not. Secondly, the bloated markets in the US keep expanding, a tree does not grow forever. What happens when the unit ( USD) of exchange declines? When your unit of measurement ( the USD) crashes 10, 20-50 percent, the market keeps rising, but just look at Argentina, Venezuela, a currency crisis eventually wipes out ALL gains. Taxation, inflation, and the USD index ( purchasing power) are invisible and unknown enemies to most investors.
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