December 15th, 2015

Keep It Simple and $QQQ over $SPY

For years I have been telling people that ask me about index investing to simply buy the $QQQ and apply whatever dollar cost averaging strategy they use to this index. Here is what that looks like the last 10 years on a chart I easily made on Koyfin. People do NOT need to own 500 stocks. They do not likely need to own 100, but if I was going to choose just one etf/index to invest in over the next 10 years it would still be $QQQ. Continue reading Keep It Simple and $QQQ over $SPY at Howard Lindzon.

For years I have been telling people that ask me about index investing to simply buy the $QQQ and apply whatever dollar cost averaging strategy they use to this index.

Here is what that looks like the last 10 years on a chart I easily made on Koyfin.

People do NOT need to own 500 stocks.

They do not likely need to own 100, but if I was going to choose just one etf/index to invest in over the next 10 years it would still be $QQQ.

Here are the 100 companies in the $QQQ.

Apple, Microsfoft and Amazon make up 33 percent of this index which shows you that no matter what ETF/index you own today, if it is market cap weighted, you own the same FAANG stocks and Microsoft.

You can buy the $QQQ in any of your brokerage accounts and it should be free.

Just expect more volatility that owning the S&P.

I do think that market cap weighted ETF investing will at some point turn on people, but I have no idea when. Nobody does.

For those that one to go one step further than the $QQQ…

If I were to build a portfolio today of these sector etf’s that I think will be the best performers another 3-5 years out, it would be:

$qqq – Nasdaq 100

$espo – Video Gaming and Esports – holdings

$xbi – S&P Biotech – holdings

$ihi – Medical Devices – holdings

I have mentioned the biotech ETF before here on my blog and I own it today.

$IHI is in my 8-80 list of stocks because I believe the medical instrument industry is only going to grow and I can’t pick medical instrument stocks (no expertise).

The $ESPO etf is new and is the creation of my friends over at Van Eck. I am not a gamer, but Tencent has been in my portfolio for a long time and is also on my 8 to 80 list of stocks to own. If your kid is a gamer, they will know all the companies and their biggest games.

Be prepared for 30-50 percent pullbacks in these ETF’s which seem to happen every 2-5 years and as the world gets more market cap weighted could happen more often as everyone panics at the same time.

It is fun to pick stocks and I will never stop doing it, but most people do not need to follow much more than these ETF’s for the coming years.

Hopefully this filter helps you in this information overload world we live in.

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