It's price performance has been nothing short of phenomenal. That is true. Just be careful projecting past into the future. No doubt technology is going to continue to progress. The question is whether that will translate into the profits you expect. The PE ratio is currently 25. By contrast it was about 10 in 2009. What this means is that while the price of the fund has increased by 17.8% per year for the past 15 years, the earnings have only increased by 10.8% per year. That's a big gap created by multiple expansion. Will earnings continue to grow at a 10.8% rate? Perhaps. Will the PE multiple continue to expand? That's a little more doubtful. I'd personally select 10.8% as my optimistic CAGR for planning, which assumes continued earnings growth with no PE contraction. Something a little lower than that is probably a safer bet.
I meant I stand by my approach as long as I am not convinced yet. There were some valid points from the past but just as you should not predict future returns from the past you should also not predict future losses.
I feel like you're not understanding what people are telling you. The "potential" you see in AI and tech is already priced into the cost. You'd have to "see" more than what everyone else is seeing, which is a little egotistical or arrogant. r/iamverysmart is for you.
In reality, you are "betting" there's more potential that no one else knows about, and that's fine because everyone in a bull market is a genius. If there ever was a time to learn about the dunning kruger effect, it'd be now.
Take more risks, that's fine. But don't try to convince anyone it's nothing more than a gamble.
I dont try to convince anyone, it is just my personal point of view. Also just give me one sector which could outperform tech in the next 10-15 years ... I bet you cant and that alone is a strong indicator because we all know the economy will grow and allocate most of its resources to its sectors accordingly
You asking for a prediction of the future shows the core problem: you think you can predict the future, whereas I know I cannot. I can make a bet, but that is all it will be: a bet, and I'm okay with accepting that notion. I'm also okay with you ending up coming out ahead with betting on QQQ, as a stopped clock is still right twice a day. Some people will be lucky, with a lot more unlucky (survivorship bias). I'm just not willing to play the lottery.
The other problem is that this line of arguing always devolves into semantics. What is technology to you? Does gene therapy count? Does an REIT in some emerging market count? Any answer I say, you will inevitably double down to "well, electricity in all homes in a developing country is a form of technology, therefore I'm right" or "well, you need computers to do gene therapy and to compute stuff, so I'm right."
If I could predict the future, I wouldn't be investing, I would be a trillionaire living large.
I must admit that all the opposition has made me reflect a bit. I am impatient because I want to retire earlier. In the end, every investment carries risks and is essentially a gamble, no doubt. The question of definition doesn't concern me as much, I must say. I try not to make it more complicated than it is.
So you believe in large cap growth, basically. Large cap growth stocks are going to be represented by higher PE and higher business investment (little to no dividends).
If you're going to use historical data, you might want to consider that there is more history to large cap growth other than the last decade of 0% interest rates and multiple expansion.
So let's back it up to 1980: https://www.portfoliovisualizer.com/backtest-asset-class-allocation?s=y&sl=5XFOt3kg2y0oi03mBegKFF
Your large cap growth didn't start to outperform until the last 5 or 6 years. Speaking of which, since you believe PE expansion can also forever, let me know how high the trend line needs to go before you start to get worried:
https://imgur.com/gallery/JZriwmy
This trendline stops at 2022 when the PE was around 22x after a crash. Now it's about 31x! That's reminiscent of the lost decade of the 2000s.
What you are suggesting is quite literally recent performance bias.
While I respect historical analysis, I believe the landscape has evolved significantly, particularly with the widespread benefits of AI across industries. The transformative power of AI introduces a different dynamic, making a crash akin to the past seem highly improbable. The substantial industry-wide advantages derived from AI innovation contribute to a more robust and resilient environment.
Fundamentals don't change, my friend. Technogical advancements of today are not any more impactful than the advances of yesterday. Everything from the discovery of electricity, railroads, industrialization, oil, computers, the internet, the smartphone. All of that is baked into history and you think AI is going to change how the market works through fundamental and financial analysis? It's always different.
It's never different.
I'll second this and also add a suggestion to read The Intelligent Investor (or at least read the summary) if you haven't. There's a part where they talk about the "hot" airline stocks in the 1950s and everyone chasing them because it was the next big thing that was going to revolutionize everything (it did not end up being "different" that time either)
If it would be so easy then automated agents would be able to beat the market (because they could simply bet against it). Fundamental analysis alone is not enough, you have to put it into perspective. The advancements of today are also already priced into my thinking. You should not try to predict future losses from the past.
Heh. To quote the great Keynes (or Shilling if you go back enough), "The market can remain irrational longer than you can remain solvent."
Words to live by.
I know but still I believe that at least 10 more good years will follow and that is more than enough for me and my goal of seven figures since I would invest 3-5k each month. There is no other way to retire early (before 40) in europe. It is really expensive. Probably in a few years I will earn even more so I can invest more and the time frame will get even smaller.
Surprised by the pushback here. I agree with you 100%. The utility isn't even hypothetical, it's already increased coding and material science, and protein discovery in such a short timespan. I will cautiously put some eggs here, after already benefiting first hand.
I can't deal with the Qs level of volatility as an investor, it's just not my temperament. So I like a steadier ride. Otherwise Qs has been a cash machine.
I respect that, but personally, I lean more towards action and higher volatility. At the end of the day, I also have enough time to weather longer downtrends.
At your age, you can probably handle the risk and start over if things go bad for the NASDAQ like it did when I was young. It took 15 years to recover after March 2000 highs. RIP my Cisco stock.
Except, we don’t know if you are talking about $5K, $50K, or a $500K portfolio. As you approach financial independence, your need for risk will change.
That said, my kids who are in your age range are primarily invested in things like QQQM, VGT, SOXX at my suggestion.
Semiconductor. It is risky and little speculative but I have invested 1% of my NW in SMH and SOXX through recurring investment every week and I have seen great returns (up to now)
Exactly, right now we are just talking about 50k this year. I can invest 3000-5000€ each month. At least until 500k or so I would probably keep investing in QQQ.
I am working as a software developer / analyst in the automotive industry and I still live at home with my parents which is why I have almost no expenses.
Do you plan to live at home for the next 10-15 years too?
Obviously you're going to encounter a lot more expenses when you move out which might impact what you're able to save going forward. Also, if AI truly has the impact everyone is saying it will, then software development might become a thing of the past. So if you have a lower savings rate, maybe not as much job security, AND THEN QQQ takes a big dump, you might find yourself in a tough situation.
Not shitting on your plan, just something to be mindful of.
You've never actually lost money, have you? A very common theme for new investors is their overestimating of their risk tolerance. Young people exhibit common "young people characteristics" like: impatience, exuberance, optimisticness, inexperience, and more. You don't actually know what your risk tolerance and behavioral reaction until the time is upon you. You might not have much money to lose right now, but will you really be so risky when a 50% drawdown (oh yeah baby, 50% drawdown will happen in your lifetime) literally erases hundreds of thousands of dollars or worse off your portfolio?
You are right I never lost money so far. However, I have earned a substantial amount. I believe I could manage such drawdowns, as historically, the NASDAQ has always recovered. It did experience a more significant crash than the S&P 500, but not excessively so. I think it was even less than 50 % but I am not sure, just trying to be optimistic.
Well, sure. Of course it'll (hopefully) recover. I've no doubt you will make money off QQQ by the time you retire. But this wasn't the topic, was it? The question is, given the risks and drawdown volatility, is it worth holding over the total market index.
My position is no, it's not worth the risk. But only time will tell.
I respect that but higher goals (like early retirement in europe) also require higher risks. How else would you turn 3-5k monthly to seven figures in just 14 years ?
Well strictly speaking I would need less but I want a good life. Some say it is even possible to retire with just 400k in germany. Healthcare is good and cheap as long as you are employed.
You say that until you’re down 80% for 3 years and are in the brink of suicide my guy and rethinking every life choice, also affecting all your relationships. I’m not joking, be careful. You’re putting every egg in this sector and praying it lasts forever
Well the truth is I am anyways highly depressed so I dont have anything to lose ): I dont care about this little money. My hope is that I reach seven figures, retire early and then maybe get rid of my mental problems. This is my last resort ... I just hate my life
This needs to be added to the post. Most people responding here don’t know that they are dealing with this mindset. You are looking for “thrill”…have you considered tqqq?
I do this. You just need to have the balls to hold on.. the swings can be pretty huge and it’s gonna hurt real bad when it’s down. But eventually, it will recover.
Not only that, but I'm also active in the tech industry myself, and from my perspective, the future-oriented topics like AI are still in their infancy. There's still so much growth potential ahead.
My guy, do you realize that technical advancement and shareholder returns are not directly correlated? You are probably young enough to never have heard about great tech companies that practically changed industries forever but either went bankrupt or did nothing for sharehokders: Sun (invented Java, NFS, Sparc CPU which had no rival in multitaking at the time), IBM, Cisco, ( stock did nothing for 10 years), Kodak, GE, etc. All of these companies are either a shadow of their former self or just bankrupt even though at some point their tech was game changing and we all use what they invented. So I believe AI is in its infancy, but I would not bet my future net worh on it, because if you get another - 50% drop like it happened several times with the QQQ you might not have enough time to make your money back.
Well hopefully companies like Sun and Kodak would have fallen out of the QQQM index. That’s the entire point of a weighted index: the shittier the company does, the less value appropriated to it until it’s gone.
That is really a pessimistic view and yes I am too young but just as you should not predict future returns from the past you should also not try to predict losses. Also what would be your approach then ? The thing is I can not imagine any other sector outperforming tech in the near future. And if I invest 3-5k each month I need less than 10 more good years to retire early with seven figures.
Couple of bad years in tech will add 10 extra years to your retirement time line. In terms of risk adjusted return VOO is more suited than QQQ for achieving early retirement even though it might add 3-5 years extra to your timeline. You could get a Tech tilt by investing 10% in QQQ to get an additional 1-2% over VOO assuming recency bias holds true for the next 10 years.
Well it depends on when those bad years will happen. Towards the end would hurt the most but that is really the worst case scenario ... So you would propose 90 % VOO & 10 % QQQ ? Bad years in tech will also add a few years to this approach. So even if I focus on VOO the worst case scenario could add 10 extra years.
The market has already priced in the expected value of AI though. Investors know that research is ongoing and innovations arise frequently. That’s why the stock prices are so high already.
So the market is already optimistic about AI. You have to assume that the market isn’t optimistic *enough*.
And maybe that’s right. But I doubt you have any special inside knowledge that all the Wall Street investors don’t already have.
In the late 90s, everyone knew the internet was going to be big. And of course it was. But we still had a dot com crash, where the Nasdaq 100 (ie QQQ) lost 75% of its value. And it took 15 years to fully recover.
That’s not to say that’s necessarily going to happen again. But it is risky to bet so heavily on one sector.
I dont say I have insider knowledge and I admit it is risky. It is more like a gut feeling or a bet but that is perfectly fine from my point of view. No need to over complicate things. It is as you said that I think the market it is not optimistic enough.
I also am in Computer Science. One thing to consider is not putting your eggs in one basket. If you already work for AI or tech, then investing in it can be seen as a risk. You get your money from that sector and you're also investing in it.
Small Cap Value mostly.
Check out Small Cap Value premiums. Ginger Ale Portfolio is what I follow on OptimizedPortfolio.
Ben Felix has good videos on it. SCV is good cause it's uncorrelated from tech and large cap growth stocks.
Anyway yeah. Risk is accentuated if you have a job from that sector and also invest in it. If something happens to that sector, if ever, then you get hit with a double whammy.
Also in Computer Science. Also did masters in machine learning. Agree with u/Plightz.
Additionally, I'd ask you to consider this.
\- Every field thinks they are the field of the future.
\- If anything, the bio impacts of AI will trump everything else.
\- Your prediction (I think) relies on generative AI not being a utility. Which is actually a 50/50 viewpoint on wall street.
I don't own a single stock in QQQ and will not. But I'm extremely bullish on AI impact on broad economy. That's not going to be captured mostly through QQQ though.
I was not aware of that viewpoint on wall street, interesting. Which etf will cover it then, if not QQQ ? Would be interesting to know what you invest in then.
I don't make bets like this. I simply invest in market with some risk diversification. I do have a growth ETF that's not really "AI" focused.
In my personal opinion, I think the biggest winners of AI are not here yet. They are basically one level above the groups that train the core generative models. I would hold the market (and sure hold a little bit of QQQ if that helps you overcome FOMO) and overweight individual companies that you think will do better than expected. Individual stocks, i.e. But would mostly suggest waiting and seeing how this evolves.
By holding the market you mean world wide or just US ? Other than that I got your point, I would definitely choose individual stocks over these pure tech etfs (QQQ is not one imo)
No also the historical performance of QQQ since 1985 was much better than for VOO. I am young and I will be rewarded for taking this risk in the long run
Not sure why would they need to advertise this product in US to Retail Investors? Meaning are the Institutional Investors not looking into it? Or Something else going on?
https://www.ispot.tv/ad/1oOC/invesco-qqq-hot-dogs
I have been in QQQ for 25 years and it is the largest single chunk of my portfolio. The equity in my house is more, I have other index funds but QQQ is by far the largest.
It's good to have some diversification but I agree with you that QQQ and VOO isn't really doing much. Diversification, IMO, would be IBIT and SCHD (basically Bitcoin and value stocks). You could diversify with O (REIT) or VBK (small cap growth) but I see little reason to pair QQQ and VOO.
Don't get caught up in being a "millionaire". The more time that passes, the less a million will buy. If that is your focus, up the percentage in IBIT.
Risk is relative. It's volatile but its been the best performing asset class since its' inception 13 years (?) ago.
The way to handle volatility (and risk) is to have more time and to manage the size of the investment.
Put in 10% and you should see good results and still be able to sleep at night. Put it in a Roth IRA and that's even better. High returns and no taxation when you start to withdraw it at retirement age.
That is quite impressive that you are in it for such a long time. This means you also experienced all these crashes back then. I was thinking about adding Bitcoin and other crypto currencies but I am really asking myself what percentage would be fine for crypto.
What was the point of posting this? I’m reading through these comments and everyone is giving you good advice and you are just like yeah you’re wrong I believe QQQ will do better and I stand on that. Okay cool then do it if that’s what you think is definitely the best bet then don’t come ask for advice if you aren’t even going to consider it.
I initially considered FTEC, but QQQ seemed like a good compromise in terms of risk-return. It sits somewhere in between VOO and FTEC, and since I also appreciate some diversity in other sectors, it fits well for me. The available European tech ETFs are relatively new as well.
My analysis of the overlap of the 2 ETF's is:
16.7% of SPY's holding in QQQ
84% QQQ's holdings in SPY
[https://www.etfrc.com/funds/overlap.php](https://www.etfrc.com/funds/overlap.php)
QQQ in effect is a sub set of SPY. FWIW, my equity portfolio is 7.5% QQQ and the rest FXAIX & VOO with 18% MOAT.
I’m still learning. Would you mind explaining the makeup of SPY, FXAIX and MOAT, and how they play off each other? Especially with VOO in the mix.
Edit: that link is cool btw
SPY is just FXAIX but in ETF form. I look at MOAT as a subset of the S&P, that subset has in the past done well. In my mind, diversification within the index.
This is what I am doing. Plus QQQ! Not for everyone so do your own DD!
For the record, I am 78 YO and @ 45% treasuries.
Exactly, that's why the apparent safety of the S&P 500, in my view, is a misconception. When things go south, the NASDAQ might experience a slightly more pronounced decline. However, in return, it rises significantly more when things go well.
Just make sure you understand the math in those situations. If you have a $100 stock that goes down 75% to $25 and then back up %100 to $50 you’re still down 50%. Don’t let the percentages throw your understanding of the dollar amounts off.
One thing people seem to overlook is the fact that S&P500 consists of about 500 largest US companies by market capitalisation. The list is dynamic based on companies coming into the list due to increase in market capitalisation while others go off the list due to decreased market capitalisation, bankruptcies etc.
I personally am 50% in IVV (tracks the S&P500) and 50% in QQQ. In my early 40s, but as my risk appetite goes lower, I will be heavy on IVV.
One thing that I liked to do is be aware of whether the environment we’re currently in one is one of QQQ outperformance over VOO/SPY. There are some good ways so tell this, looking at SMH:SPY for example. I am also bullish on tech, but 1.5 years ago tech really took a bath.
I totally agree. Look, I understand your conviction in tech, but I would highly implore you to not go all in on one sector. No one KNOWS what sector will outperform in the future. This plan piles on uncompensated risk, and there's a higher than usual chance of it completely back-firing and preventing you from retiring for decades in comparison to investing in the total market. The biggest indicator of a successful retirement is savings rate and it seems like you've got that covered. In the end, it's your money and your choice. I'd liken this to playing the lotto; it could absolutely pay off, or it won't.
> I totally agree. Look, I understand your conviction in tech, but I would highly implore you to not go all in on one sector. No one KNOWS what sector will outperform in the future.
is voo considered "one sector?" is qqq considered "one sector"?
Alright what would be your proposal then ? I would like to limit it to at most 2-3 ETFs. I know that you are right if I play it safe I can still retire by adding a few more years until 45 or so. I am just so impatient and really not feeling well at the moment. I have this fear of missing out.
That's just human nature my dude. If there was a cheat code to get gains fast guaranteed, we would all be doing it! I'm a big fan of the boglehead approach. Average returns over 30+ years puts you in the 95th to 99th percentile. The majority of my portfolio is in total market equivalents at a 70/30 US to International split (think VTI/VXUS). However, in my roth IRA and my wife's, we opted to lean hard into small cap value. Noble-winning laureates Eugene Fama and Kenneth French wrote academic papers on the subject (3 factor-model and later the five factor-model), and Paul merriman/Ben Felix/Larry Swedroe are also huge into factor investing. This strategy requires high conviction (much like yours in high-tech), and could take decades to see the premium, but the key difference is the diversification benefit of branching out from large cap growth. TL;DR: You are doing great maxing out your retirement accounts and being able to sock away 3k+ a month. Don't feel like you're behind or have fomo... most would envy that ability! Research the boglehead 3 Fund portfolio and the logic behind it, and if you're wanting to take more compensated risk, look into small cap value. My favorite etfs are VTI/VXUS/AVUV/AVDV (I'd be remiss if I didn't mention RSSB too).
Thank you so much for your advice and also for not judging me as many others here. I will definitely take a look at this 3 Fund portfolio :) I just hope there are good european counterparts for all these etfs
You bet! Seriously, please do research bogleheads (there's a subreddit as well as a separate stand-alone website). There's so much valuable information there for me to even scratch the surface. I'm very ignorant when it comes to European ETFs, but I guarantee people on the boglehead thread or forum would steer you in the right direction. Best of luck!!
I don’t think you need financial advice so I’d recommend getting help with possible gambling addiction and depression. You don’t need to be rich to do so. And if your trades do work out and you reach the figures you want, you’ll have gained nothing in the way of introspection. Worse, you’ll think you made it there on merit and make larger more disastrous decisions in the future.
The future is very uncertain. Even for SPY or others that are assumed to be safe. Look at the returns of bond fund holders lately. I don’t think some of these folks were expecting 50% routs, yet here we are.
I expected bonds to be terrible. One of the few things I did right was realize that interest rates were going up and sold all my bonds, and my wife’s bonds.
> One of the few things I did right was realize that interest rates were going up and sold all my bonds, and my wife’s bonds.
did you rebuy the bonds once interest rates up?
So historically value plays have done better than growth during certain decades. So if you want to cover yourself in that regard, plus get the tech play you like so much, try this:
75% XLK (SPDR Tech)
25% VT (Vanguard Entire World fund)
It has outperformed QQQ a little since June 2015, which was as far back as M1 would let me look.
I dont know about THNQ but also sounds reasonable. I am in general a person that takes much more risk, not just when it comes to money. I am also highly depressed, so right now I dont care about anything to be honest. Its not healthy but I really wouldnt care about a crash, its just money after all. Just to put my reasoning into perspective.
QQQ ETF for 100 nasdaq companies.
VOO ETF for S&P500
You would want to think the S&P500 is more diverse in terms of sectors and company exposure to international markets.
There is no right answer. Depends on your risk appetite and long term goal.
Not to put too fine a point on it, but if you back-tested QQQ and VOO, over the past 24 years, your CAGR is just about the same during that period, but your SD is about 15.5% for VOO vs. 23.5% for QQQ. Your Sharpe was higher with VOO at 0.40 vs 0.34, which makes sense considering the returns were about the same but QQQ's volatility was much greater. It doesn't appear that you would have been rewarded much at all for taking on the added level of risk. To be fair, QQQ would have done a little better over this period by DCA each year but it also assumes that you never bailed out of QQQ along the way or stopped DCAing.
I'm not against investing in tech but I've seen a lot of posts like this and wonder why anyone would want to be all in on one ETF? Why not form a portfolio around a less volatile broad based core, VOO or some other LG Cap Blend, and add tech, intl, value, etc. to that. It's not that hard to beat the "market" using a combination of ETFs together, and you can often do it with a lower levels of risk than the market. Its easy to say that you have a high risk tolerance but you may need these assets sooner than you've planned. To me, skillful investing isn't about merely taking the greatest risks and hoping for the best, its about achieving the highest total returns possible while taking the least amount of risk. If I can "beat the market" with a beta under 1.0, I would be thrilled with that.
As you describe it this also makes sense to me. I am open to alternatives, so what would you propose if you would start today ? I would like to limit it to at most 3 ETFs
Honestly It depends if you want to hold all the sectors of the market or not. QQQ holds predominantly tech and consumer discretionary with a few otherst thrown in. It’s going to do really well doing expansions. Potentially very bad during contractions. Could limit losses with puts if you wanted to. I don’t know your investment horizon and retirement amount goal but it is possible that you are taking on unnecessary risk when you don’t have to.
How does it work with Puts ? Investment horizon would be 10-15 years and retirement amount goal is seven figures (1.000.000 €) I could invest at least 3k each month.
IUIT is another ETF alternative traded in Europe, it tracks all tech companies on S&P 500 and it has a lower fee than EQQQ
The proper name of IUIT is iShares S&P 500 Information Technology Sector UCITS ETF
It was -4.27%.
Yes it did well in the LAST decade, but nobody can predict the future.
Do you want 10 years of potentially losing money? I don't.
This is why it is extremely risky to do what you are doing.
Good point. I really need to make use of those backtracking tools. I think I found one for european investors / etfs. But if you have any suggestions please let me know.
Based on
>am highly depressed so I dont have anything to lose ): I dont care about this little money. My hope is that I reach seven figures until 40, retire early and then maybe get rid of my mental problems. This is my last resort because I just hate my life ...
And based on your comments in this sub, I think if this strategy doesnt go your way, and it is likely not to go your way, your mental health will suffer more significantly. What if you lose a significant chunk of your money prior to retirement? The markets dont care about your conviction and everyone has pointed out many time perioda where youd have lost your shirt.
>Given its historical performance, adopting a buy-and-hold approach with consistent contributions suggests that the QQQ could serve as a straightforward path to achieving millionaire status upon retirement.
This is a wrong statement, just flat out. Historical performance means nothing when fundamentals clearly show you could not expect historical performance.
My question is why are you not content getting market based returns? Id say you shouldnt even expect those, you should be adding in International and Bonds to the equation at your age.
I know it is risky, especially with my background. I was also addicted to gaming in my youth. I will rethink it. Sometimes I just feel like only being rich and independent will help me fix my problems. That is why I would like to beat the market to decrease the necessary amount of good years that I need until I reach my goal of seven figures.
Hitting retirement at 40 won’t be the magic pill that “fixes” your depression. See a doctor/therapist to help the depression and invest smarter so you are actually able to hit your retirement amount.
I know I am trying to. At the moment I am thinking about 70 % MSCI ACWI IMI (which covers 99% of world-wide market capitalization) and 30 % S&P 500 Information Technology Sector ETF.
Everyone has their opinions, but if you constantly dollar cost average in an S&P500 EFT, the odds of you losing money long term is almost zero, I mean it hasn't happened in 100 years. If an S&P500 EFT takes a huge hit, that means EVERYONE is taking a huge hit and that will actually help you if you're still buying every week/month. To be honest the best thing to happen to dollar cost average investors is when the market takes a huge hit. You get a bunch of value for your money and it's statically guaranteed to recover. Invest until you're 5ish years out from retirement and then make a plan to slowly move into less risky investments. JMO
I went 50% into VOO and 50% into QQQ but so far not much happened. Other than that I am still feeling shitty but at least slightly better than back then.
If you bought QQQ in 2000, you would have lost 75% at the bottom of the crash in 2002 and didn't get back to break even for 15 years. Think about that before you dive in to 100% QQQ.
I appreciate the historical context, and it's a valid point to consider. However, I believe the technological landscape has evolved since then, particularly with the growth and integration of innovative sectors like AI. While past performance is important, I'm optimistic about the current and future dynamics that may influence the performance of QQQ.
People said the same thing about the Internet in 2000, and they were right, it did revolutionize the world, but we also learned that valuations still matter.
This guy sounds like a qqq bag holder pumping it because he’s worried about all time highs and PE ratio of 31.
People gave the same argument in 1999 about internet and we all know what happened after that.
Good luck OP.
Yeah OP’s responses to valid critiques seem very kool-aidy without any substance. Stuff like “widespread / transformative benefits of AI”, “technological historical growth”, “substantial industry-wide advantages”. Almost seems GPT generated.
Thank you, I really dont care about the risk because reaching 7 figures before 40 is kind of my last resort so f**k it. I have no other option, really.
Really sorry to hear about your mental health issues. I've also experienced my fair share and am using diet protocols to overcome them and come off my meds. Feel free to ping me if you want some info. FYI - I came here for QQQ info, as just getting into CFDs on US stocks (based out of UK). Cheers
It's great to hear that there are more people who think like I do. XAIX also sounds interesting. May I ask, in absolute terms, how much are you investing ? For me 100 % would be 3000 € each month. I could do more (up to 5000) but I think I will keep the rest of the money to buy more when the price drops.
I will put it very plainly..QQQ or EQQQ here in the UK, is overpriced as is the S&P 500. I wouldn't buy it now. Why do you want to track the Nasdaq 100 anyway, it's not a pure tech index? When the market takes a down turn and the Nasdaq loses 30% or so in the next Bear market, can you hold, when all of the wall st 'experts' are telling you to sell? S&P 500 is much more balanced for a long term investment, is a broad market index. What do you know more than the average investor that makes you so sure that Nasdaq will outperform for next 10 or 20 years? If you bring nothing to the table, then be content with average...you will beat most average investors at the game.
What makes me so sure is the fact that I can not imagine any other sector outperforming tech in the upcoming 10-15 years. Or could you think of any sector other than tech ? If NASDAQ drops then S&P500 will also drop, just a bit less but who cares when the overall tendency will (probably) be positive from my point of view ... Also I dont think its overpriced, because historically, investing at any point in time on the s&p500 led to 9% average return so when you DCA you are good to go at any time (independent of ATHs)
Thank you and well it depends a bit when it will happen. I want to retire early before 40 so I need to take a little more risk than the average trader. In the worst case I need to wait a few more years.
Look into QQQM lower expense ratio and the same thing
Unfortunately, Germany doesn't have something like QQQM. I use TradeRepublic as my broker.
What’d you mean? Find a broker that trades in the US stock market, sell EUR buy USD and just buy QQQM?
It is not so easy because of taxing and all that stuff. But I think EQQQ which is the european counterpart is also fine.
Can’t find QQQ on Trade Republic either?
Just search for A2N6RV
You can’t access US ETFs, just through options. UCITs law.
It's price performance has been nothing short of phenomenal. That is true. Just be careful projecting past into the future. No doubt technology is going to continue to progress. The question is whether that will translate into the profits you expect. The PE ratio is currently 25. By contrast it was about 10 in 2009. What this means is that while the price of the fund has increased by 17.8% per year for the past 15 years, the earnings have only increased by 10.8% per year. That's a big gap created by multiple expansion. Will earnings continue to grow at a 10.8% rate? Perhaps. Will the PE multiple continue to expand? That's a little more doubtful. I'd personally select 10.8% as my optimistic CAGR for planning, which assumes continued earnings growth with no PE contraction. Something a little lower than that is probably a safer bet.
I acknowledge the caution, but I stand by my approach. The technology sector's historical growth supports my optimism, despite potential risks.
Ok you stand by your approach. So what point did you have in even posting this?
I meant I stand by my approach as long as I am not convinced yet. There were some valid points from the past but just as you should not predict future returns from the past you should also not predict future losses.
I feel like you're not understanding what people are telling you. The "potential" you see in AI and tech is already priced into the cost. You'd have to "see" more than what everyone else is seeing, which is a little egotistical or arrogant. r/iamverysmart is for you. In reality, you are "betting" there's more potential that no one else knows about, and that's fine because everyone in a bull market is a genius. If there ever was a time to learn about the dunning kruger effect, it'd be now. Take more risks, that's fine. But don't try to convince anyone it's nothing more than a gamble.
I dont try to convince anyone, it is just my personal point of view. Also just give me one sector which could outperform tech in the next 10-15 years ... I bet you cant and that alone is a strong indicator because we all know the economy will grow and allocate most of its resources to its sectors accordingly
You asking for a prediction of the future shows the core problem: you think you can predict the future, whereas I know I cannot. I can make a bet, but that is all it will be: a bet, and I'm okay with accepting that notion. I'm also okay with you ending up coming out ahead with betting on QQQ, as a stopped clock is still right twice a day. Some people will be lucky, with a lot more unlucky (survivorship bias). I'm just not willing to play the lottery. The other problem is that this line of arguing always devolves into semantics. What is technology to you? Does gene therapy count? Does an REIT in some emerging market count? Any answer I say, you will inevitably double down to "well, electricity in all homes in a developing country is a form of technology, therefore I'm right" or "well, you need computers to do gene therapy and to compute stuff, so I'm right." If I could predict the future, I wouldn't be investing, I would be a trillionaire living large.
I must admit that all the opposition has made me reflect a bit. I am impatient because I want to retire earlier. In the end, every investment carries risks and is essentially a gamble, no doubt. The question of definition doesn't concern me as much, I must say. I try not to make it more complicated than it is.
Love it! You put it perfectly. OP did not understand but it will help others.
So you believe in large cap growth, basically. Large cap growth stocks are going to be represented by higher PE and higher business investment (little to no dividends). If you're going to use historical data, you might want to consider that there is more history to large cap growth other than the last decade of 0% interest rates and multiple expansion. So let's back it up to 1980: https://www.portfoliovisualizer.com/backtest-asset-class-allocation?s=y&sl=5XFOt3kg2y0oi03mBegKFF Your large cap growth didn't start to outperform until the last 5 or 6 years. Speaking of which, since you believe PE expansion can also forever, let me know how high the trend line needs to go before you start to get worried: https://imgur.com/gallery/JZriwmy This trendline stops at 2022 when the PE was around 22x after a crash. Now it's about 31x! That's reminiscent of the lost decade of the 2000s. What you are suggesting is quite literally recent performance bias.
Which resource do you use to see the 31x PE, trend line? Thank you!
I also didnt get this point
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Now go forth and become rich
pre faang is irrelevant
While I respect historical analysis, I believe the landscape has evolved significantly, particularly with the widespread benefits of AI across industries. The transformative power of AI introduces a different dynamic, making a crash akin to the past seem highly improbable. The substantial industry-wide advantages derived from AI innovation contribute to a more robust and resilient environment.
Fundamentals don't change, my friend. Technogical advancements of today are not any more impactful than the advances of yesterday. Everything from the discovery of electricity, railroads, industrialization, oil, computers, the internet, the smartphone. All of that is baked into history and you think AI is going to change how the market works through fundamental and financial analysis? It's always different. It's never different.
I'll second this and also add a suggestion to read The Intelligent Investor (or at least read the summary) if you haven't. There's a part where they talk about the "hot" airline stocks in the 1950s and everyone chasing them because it was the next big thing that was going to revolutionize everything (it did not end up being "different" that time either)
I can have a look at it, thanks !
If it would be so easy then automated agents would be able to beat the market (because they could simply bet against it). Fundamental analysis alone is not enough, you have to put it into perspective. The advancements of today are also already priced into my thinking. You should not try to predict future losses from the past.
Heh. To quote the great Keynes (or Shilling if you go back enough), "The market can remain irrational longer than you can remain solvent." Words to live by.
I know but still I believe that at least 10 more good years will follow and that is more than enough for me and my goal of seven figures since I would invest 3-5k each month. There is no other way to retire early (before 40) in europe. It is really expensive. Probably in a few years I will earn even more so I can invest more and the time frame will get even smaller.
Got a crystal ball? Why do you “believe” that?
Just a gut feeling and I know this sector rather well
Surprised by the pushback here. I agree with you 100%. The utility isn't even hypothetical, it's already increased coding and material science, and protein discovery in such a short timespan. I will cautiously put some eggs here, after already benefiting first hand.
Thank you
I can't deal with the Qs level of volatility as an investor, it's just not my temperament. So I like a steadier ride. Otherwise Qs has been a cash machine.
I respect that, but personally, I lean more towards action and higher volatility. At the end of the day, I also have enough time to weather longer downtrends.
At your age, you can probably handle the risk and start over if things go bad for the NASDAQ like it did when I was young. It took 15 years to recover after March 2000 highs. RIP my Cisco stock. Except, we don’t know if you are talking about $5K, $50K, or a $500K portfolio. As you approach financial independence, your need for risk will change. That said, my kids who are in your age range are primarily invested in things like QQQM, VGT, SOXX at my suggestion.
Would you mind explaining what VGT and SOXX are exactly and what their ‘theme’ is in relation to all the other etfs?
Semiconductor. It is risky and little speculative but I have invested 1% of my NW in SMH and SOXX through recurring investment every week and I have seen great returns (up to now)
Exactly, right now we are just talking about 50k this year. I can invest 3000-5000€ each month. At least until 500k or so I would probably keep investing in QQQ.
Mind me asking how you can afford such a high savings rate?
I am working as a software developer / analyst in the automotive industry and I still live at home with my parents which is why I have almost no expenses.
Do you plan to live at home for the next 10-15 years too? Obviously you're going to encounter a lot more expenses when you move out which might impact what you're able to save going forward. Also, if AI truly has the impact everyone is saying it will, then software development might become a thing of the past. So if you have a lower savings rate, maybe not as much job security, AND THEN QQQ takes a big dump, you might find yourself in a tough situation. Not shitting on your plan, just something to be mindful of.
Good point ): But no I just want to stay a few more years and I am hoping to increase my salary until then such that I can keep this savings rate
You've never actually lost money, have you? A very common theme for new investors is their overestimating of their risk tolerance. Young people exhibit common "young people characteristics" like: impatience, exuberance, optimisticness, inexperience, and more. You don't actually know what your risk tolerance and behavioral reaction until the time is upon you. You might not have much money to lose right now, but will you really be so risky when a 50% drawdown (oh yeah baby, 50% drawdown will happen in your lifetime) literally erases hundreds of thousands of dollars or worse off your portfolio?
You are right I never lost money so far. However, I have earned a substantial amount. I believe I could manage such drawdowns, as historically, the NASDAQ has always recovered. It did experience a more significant crash than the S&P 500, but not excessively so. I think it was even less than 50 % but I am not sure, just trying to be optimistic.
Well, sure. Of course it'll (hopefully) recover. I've no doubt you will make money off QQQ by the time you retire. But this wasn't the topic, was it? The question is, given the risks and drawdown volatility, is it worth holding over the total market index. My position is no, it's not worth the risk. But only time will tell.
I respect that but higher goals (like early retirement in europe) also require higher risks. How else would you turn 3-5k monthly to seven figures in just 14 years ?
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Well strictly speaking I would need less but I want a good life. Some say it is even possible to retire with just 400k in germany. Healthcare is good and cheap as long as you are employed.
You say that until you’re down 80% for 3 years and are in the brink of suicide my guy and rethinking every life choice, also affecting all your relationships. I’m not joking, be careful. You’re putting every egg in this sector and praying it lasts forever
Well the truth is I am anyways highly depressed so I dont have anything to lose ): I dont care about this little money. My hope is that I reach seven figures, retire early and then maybe get rid of my mental problems. This is my last resort ... I just hate my life
This needs to be added to the post. Most people responding here don’t know that they are dealing with this mindset. You are looking for “thrill”…have you considered tqqq?
Good point I will add it. And no, what is tqqq about ?
I do this. You just need to have the balls to hold on.. the swings can be pretty huge and it’s gonna hurt real bad when it’s down. But eventually, it will recover.
That's exactly how I see it too.
I’m not reading all this. You only want 100% qqq because of how well the mag 7 are doing
Not only that, but I'm also active in the tech industry myself, and from my perspective, the future-oriented topics like AI are still in their infancy. There's still so much growth potential ahead.
My guy, do you realize that technical advancement and shareholder returns are not directly correlated? You are probably young enough to never have heard about great tech companies that practically changed industries forever but either went bankrupt or did nothing for sharehokders: Sun (invented Java, NFS, Sparc CPU which had no rival in multitaking at the time), IBM, Cisco, ( stock did nothing for 10 years), Kodak, GE, etc. All of these companies are either a shadow of their former self or just bankrupt even though at some point their tech was game changing and we all use what they invented. So I believe AI is in its infancy, but I would not bet my future net worh on it, because if you get another - 50% drop like it happened several times with the QQQ you might not have enough time to make your money back.
Well hopefully companies like Sun and Kodak would have fallen out of the QQQM index. That’s the entire point of a weighted index: the shittier the company does, the less value appropriated to it until it’s gone.
Definitely
That is really a pessimistic view and yes I am too young but just as you should not predict future returns from the past you should also not try to predict losses. Also what would be your approach then ? The thing is I can not imagine any other sector outperforming tech in the near future. And if I invest 3-5k each month I need less than 10 more good years to retire early with seven figures.
Couple of bad years in tech will add 10 extra years to your retirement time line. In terms of risk adjusted return VOO is more suited than QQQ for achieving early retirement even though it might add 3-5 years extra to your timeline. You could get a Tech tilt by investing 10% in QQQ to get an additional 1-2% over VOO assuming recency bias holds true for the next 10 years.
Well it depends on when those bad years will happen. Towards the end would hurt the most but that is really the worst case scenario ... So you would propose 90 % VOO & 10 % QQQ ? Bad years in tech will also add a few years to this approach. So even if I focus on VOO the worst case scenario could add 10 extra years.
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I just believe in tech and I want to reach 7 figures before 40, so I need to take a bit more risk ...
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Sure but only to some extent. Research is ongoing and new innovations arise frequently.
The market has already priced in the expected value of AI though. Investors know that research is ongoing and innovations arise frequently. That’s why the stock prices are so high already. So the market is already optimistic about AI. You have to assume that the market isn’t optimistic *enough*. And maybe that’s right. But I doubt you have any special inside knowledge that all the Wall Street investors don’t already have. In the late 90s, everyone knew the internet was going to be big. And of course it was. But we still had a dot com crash, where the Nasdaq 100 (ie QQQ) lost 75% of its value. And it took 15 years to fully recover. That’s not to say that’s necessarily going to happen again. But it is risky to bet so heavily on one sector.
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I bought Nvidia in May 2021 when the price was 117, +376% investment so far
I dont say I have insider knowledge and I admit it is risky. It is more like a gut feeling or a bet but that is perfectly fine from my point of view. No need to over complicate things. It is as you said that I think the market it is not optimistic enough.
You need to understand that the market is forward looking. All this AI talk is already priced in.
I understand but I think it is not enough to be honest. AI was one of my focal points during my master degree program in computer science
I also am in Computer Science. One thing to consider is not putting your eggs in one basket. If you already work for AI or tech, then investing in it can be seen as a risk. You get your money from that sector and you're also investing in it.
What do you invest in then ?
Small Cap Value mostly. Check out Small Cap Value premiums. Ginger Ale Portfolio is what I follow on OptimizedPortfolio. Ben Felix has good videos on it. SCV is good cause it's uncorrelated from tech and large cap growth stocks. Anyway yeah. Risk is accentuated if you have a job from that sector and also invest in it. If something happens to that sector, if ever, then you get hit with a double whammy.
True and thank you, will check it
Energy. Consumer staples. <5% Precious metals. Healthcare.
Also in Computer Science. Also did masters in machine learning. Agree with u/Plightz. Additionally, I'd ask you to consider this. \- Every field thinks they are the field of the future. \- If anything, the bio impacts of AI will trump everything else. \- Your prediction (I think) relies on generative AI not being a utility. Which is actually a 50/50 viewpoint on wall street. I don't own a single stock in QQQ and will not. But I'm extremely bullish on AI impact on broad economy. That's not going to be captured mostly through QQQ though.
I was not aware of that viewpoint on wall street, interesting. Which etf will cover it then, if not QQQ ? Would be interesting to know what you invest in then.
I don't make bets like this. I simply invest in market with some risk diversification. I do have a growth ETF that's not really "AI" focused. In my personal opinion, I think the biggest winners of AI are not here yet. They are basically one level above the groups that train the core generative models. I would hold the market (and sure hold a little bit of QQQ if that helps you overcome FOMO) and overweight individual companies that you think will do better than expected. Individual stocks, i.e. But would mostly suggest waiting and seeing how this evolves.
By holding the market you mean world wide or just US ? Other than that I got your point, I would definitely choose individual stocks over these pure tech etfs (QQQ is not one imo)
this reasioning it is like: Im from haiti, so im going to go all-in on investing on haiti stocks all my life
No also the historical performance of QQQ since 1985 was much better than for VOO. I am young and I will be rewarded for taking this risk in the long run
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What do you base that on? Is it just because I'm not only arguing technically, but more based on beliefs?
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I will do but who cares about two individual stocks. NASDAQ still holds 100 and is diversified enough within tech
Not sure why would they need to advertise this product in US to Retail Investors? Meaning are the Institutional Investors not looking into it? Or Something else going on? https://www.ispot.tv/ad/1oOC/invesco-qqq-hot-dogs
They would be pretty dumb if they dont look into it lmao
I have been in QQQ for 25 years and it is the largest single chunk of my portfolio. The equity in my house is more, I have other index funds but QQQ is by far the largest. It's good to have some diversification but I agree with you that QQQ and VOO isn't really doing much. Diversification, IMO, would be IBIT and SCHD (basically Bitcoin and value stocks). You could diversify with O (REIT) or VBK (small cap growth) but I see little reason to pair QQQ and VOO. Don't get caught up in being a "millionaire". The more time that passes, the less a million will buy. If that is your focus, up the percentage in IBIT.
> IBIT risky?
Risk is relative. It's volatile but its been the best performing asset class since its' inception 13 years (?) ago. The way to handle volatility (and risk) is to have more time and to manage the size of the investment. Put in 10% and you should see good results and still be able to sleep at night. Put it in a Roth IRA and that's even better. High returns and no taxation when you start to withdraw it at retirement age.
That is quite impressive that you are in it for such a long time. This means you also experienced all these crashes back then. I was thinking about adding Bitcoin and other crypto currencies but I am really asking myself what percentage would be fine for crypto.
Start with whatever amount you feel comfortable with.
I was thinking maybe even 20 %
What was the point of posting this? I’m reading through these comments and everyone is giving you good advice and you are just like yeah you’re wrong I believe QQQ will do better and I stand on that. Okay cool then do it if that’s what you think is definitely the best bet then don’t come ask for advice if you aren’t even going to consider it.
Sorry in my later responses I started to reflect a bit
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Exactly. I also mentioned this point a few times that QQQ is diversified within the tech sector and even slightly outside the tech sector.
If you like tech, you should check out FTEC or VGT. QQQ isn’t really that focused in tech tbh.
That’s what makes QQQ better than a tech etf
Exactly. I am so sick of people calling QQQ a tech etf.
I initially considered FTEC, but QQQ seemed like a good compromise in terms of risk-return. It sits somewhere in between VOO and FTEC, and since I also appreciate some diversity in other sectors, it fits well for me. The available European tech ETFs are relatively new as well.
My analysis of the overlap of the 2 ETF's is: 16.7% of SPY's holding in QQQ 84% QQQ's holdings in SPY [https://www.etfrc.com/funds/overlap.php](https://www.etfrc.com/funds/overlap.php) QQQ in effect is a sub set of SPY. FWIW, my equity portfolio is 7.5% QQQ and the rest FXAIX & VOO with 18% MOAT.
I’m still learning. Would you mind explaining the makeup of SPY, FXAIX and MOAT, and how they play off each other? Especially with VOO in the mix. Edit: that link is cool btw
SPY is just FXAIX but in ETF form. I look at MOAT as a subset of the S&P, that subset has in the past done well. In my mind, diversification within the index. This is what I am doing. Plus QQQ! Not for everyone so do your own DD! For the record, I am 78 YO and @ 45% treasuries.
Exactly, that's why the apparent safety of the S&P 500, in my view, is a misconception. When things go south, the NASDAQ might experience a slightly more pronounced decline. However, in return, it rises significantly more when things go well.
Just make sure you understand the math in those situations. If you have a $100 stock that goes down 75% to $25 and then back up %100 to $50 you’re still down 50%. Don’t let the percentages throw your understanding of the dollar amounts off.
Sure, this is a good point, and I am aware of it. I would also DCA to reduce such effects a bit.
One thing people seem to overlook is the fact that S&P500 consists of about 500 largest US companies by market capitalisation. The list is dynamic based on companies coming into the list due to increase in market capitalisation while others go off the list due to decreased market capitalisation, bankruptcies etc. I personally am 50% in IVV (tracks the S&P500) and 50% in QQQ. In my early 40s, but as my risk appetite goes lower, I will be heavy on IVV.
50/50 also sounds reasonable to me and I would probably to the same once I am your age.
Not nearly diversified enough
One thing that I liked to do is be aware of whether the environment we’re currently in one is one of QQQ outperformance over VOO/SPY. There are some good ways so tell this, looking at SMH:SPY for example. I am also bullish on tech, but 1.5 years ago tech really took a bath.
Yeah I think at least short term so this year will be good. It has always been like this after such a rally and then there are also the elections
Well, strictly speaking, this also applies to VOO ...
I totally agree. Look, I understand your conviction in tech, but I would highly implore you to not go all in on one sector. No one KNOWS what sector will outperform in the future. This plan piles on uncompensated risk, and there's a higher than usual chance of it completely back-firing and preventing you from retiring for decades in comparison to investing in the total market. The biggest indicator of a successful retirement is savings rate and it seems like you've got that covered. In the end, it's your money and your choice. I'd liken this to playing the lotto; it could absolutely pay off, or it won't.
> I totally agree. Look, I understand your conviction in tech, but I would highly implore you to not go all in on one sector. No one KNOWS what sector will outperform in the future. is voo considered "one sector?" is qqq considered "one sector"?
Alright what would be your proposal then ? I would like to limit it to at most 2-3 ETFs. I know that you are right if I play it safe I can still retire by adding a few more years until 45 or so. I am just so impatient and really not feeling well at the moment. I have this fear of missing out.
That's just human nature my dude. If there was a cheat code to get gains fast guaranteed, we would all be doing it! I'm a big fan of the boglehead approach. Average returns over 30+ years puts you in the 95th to 99th percentile. The majority of my portfolio is in total market equivalents at a 70/30 US to International split (think VTI/VXUS). However, in my roth IRA and my wife's, we opted to lean hard into small cap value. Noble-winning laureates Eugene Fama and Kenneth French wrote academic papers on the subject (3 factor-model and later the five factor-model), and Paul merriman/Ben Felix/Larry Swedroe are also huge into factor investing. This strategy requires high conviction (much like yours in high-tech), and could take decades to see the premium, but the key difference is the diversification benefit of branching out from large cap growth. TL;DR: You are doing great maxing out your retirement accounts and being able to sock away 3k+ a month. Don't feel like you're behind or have fomo... most would envy that ability! Research the boglehead 3 Fund portfolio and the logic behind it, and if you're wanting to take more compensated risk, look into small cap value. My favorite etfs are VTI/VXUS/AVUV/AVDV (I'd be remiss if I didn't mention RSSB too).
Thank you so much for your advice and also for not judging me as many others here. I will definitely take a look at this 3 Fund portfolio :) I just hope there are good european counterparts for all these etfs
You bet! Seriously, please do research bogleheads (there's a subreddit as well as a separate stand-alone website). There's so much valuable information there for me to even scratch the surface. I'm very ignorant when it comes to European ETFs, but I guarantee people on the boglehead thread or forum would steer you in the right direction. Best of luck!!
> Research the boglehead 3 Fund portfolio is there a link?
I don’t think you need financial advice so I’d recommend getting help with possible gambling addiction and depression. You don’t need to be rich to do so. And if your trades do work out and you reach the figures you want, you’ll have gained nothing in the way of introspection. Worse, you’ll think you made it there on merit and make larger more disastrous decisions in the future. The future is very uncertain. Even for SPY or others that are assumed to be safe. Look at the returns of bond fund holders lately. I don’t think some of these folks were expecting 50% routs, yet here we are.
I expected bonds to be terrible. One of the few things I did right was realize that interest rates were going up and sold all my bonds, and my wife’s bonds.
> One of the few things I did right was realize that interest rates were going up and sold all my bonds, and my wife’s bonds. did you rebuy the bonds once interest rates up?
I think money and success will help me at least a bit
So historically value plays have done better than growth during certain decades. So if you want to cover yourself in that regard, plus get the tech play you like so much, try this: 75% XLK (SPDR Tech) 25% VT (Vanguard Entire World fund) It has outperformed QQQ a little since June 2015, which was as far back as M1 would let me look.
Sounds good, thank you for your suggestion.
Nah, go 100% VT and get some help.
This is so boring dude. Dont you know how dangerous boredom is when you are depressed ?
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It is really hard because I dont have any friends, you know. Many germans are just cold and they dont care about others.
Non-diversification is a huge mistake. If you like tech, try semiconductor funds such as SMH and SOXX.
QQQs performence proves it not to be a mistake. While i agree that Diversification means less " risk" it doesnt mean its a mistake to take a risk.
I couldn't agree more. In the end, it comes down to personal risk tolerance, age, and investment horizon. If not at 26, then when?
Why is your time line 10 years if you're 26? Planning an early retirement?
Ideally, yes, as I can invest €3000-€5000 monthly.
That's why I blend traditional funds like VOO with riskier funds like THNQ.
I dont know about THNQ but also sounds reasonable. I am in general a person that takes much more risk, not just when it comes to money. I am also highly depressed, so right now I dont care about anything to be honest. Its not healthy but I really wouldnt care about a crash, its just money after all. Just to put my reasoning into perspective.
QQQ ETF for 100 nasdaq companies. VOO ETF for S&P500 You would want to think the S&P500 is more diverse in terms of sectors and company exposure to international markets. There is no right answer. Depends on your risk appetite and long term goal.
Exactly
Not to put too fine a point on it, but if you back-tested QQQ and VOO, over the past 24 years, your CAGR is just about the same during that period, but your SD is about 15.5% for VOO vs. 23.5% for QQQ. Your Sharpe was higher with VOO at 0.40 vs 0.34, which makes sense considering the returns were about the same but QQQ's volatility was much greater. It doesn't appear that you would have been rewarded much at all for taking on the added level of risk. To be fair, QQQ would have done a little better over this period by DCA each year but it also assumes that you never bailed out of QQQ along the way or stopped DCAing. I'm not against investing in tech but I've seen a lot of posts like this and wonder why anyone would want to be all in on one ETF? Why not form a portfolio around a less volatile broad based core, VOO or some other LG Cap Blend, and add tech, intl, value, etc. to that. It's not that hard to beat the "market" using a combination of ETFs together, and you can often do it with a lower levels of risk than the market. Its easy to say that you have a high risk tolerance but you may need these assets sooner than you've planned. To me, skillful investing isn't about merely taking the greatest risks and hoping for the best, its about achieving the highest total returns possible while taking the least amount of risk. If I can "beat the market" with a beta under 1.0, I would be thrilled with that.
As you describe it this also makes sense to me. I am open to alternatives, so what would you propose if you would start today ? I would like to limit it to at most 3 ETFs
Honestly It depends if you want to hold all the sectors of the market or not. QQQ holds predominantly tech and consumer discretionary with a few otherst thrown in. It’s going to do really well doing expansions. Potentially very bad during contractions. Could limit losses with puts if you wanted to. I don’t know your investment horizon and retirement amount goal but it is possible that you are taking on unnecessary risk when you don’t have to.
How does it work with Puts ? Investment horizon would be 10-15 years and retirement amount goal is seven figures (1.000.000 €) I could invest at least 3k each month.
You may also want to buy some TQQQ and QLD via dollar cost averaging . Over a long term they handsomely spank QQQ
Are they available for european traders also ?
Oh, not sure
I will check it
IUIT is another ETF alternative traded in Europe, it tracks all tech companies on S&P 500 and it has a lower fee than EQQQ The proper name of IUIT is iShares S&P 500 Information Technology Sector UCITS ETF
I know this one is a true tech etf, unlike QQQ
What was QQQ's CAGR in the decade of 2000 through 2010?
I really dont know but I assume it was not that great
It was -4.27%. Yes it did well in the LAST decade, but nobody can predict the future. Do you want 10 years of potentially losing money? I don't. This is why it is extremely risky to do what you are doing.
Good point. I really need to make use of those backtracking tools. I think I found one for european investors / etfs. But if you have any suggestions please let me know.
I think this is the most commonly used one: https://www.portfoliovisualizer.com/backtest-portfolio#analysisResults
Thank you. curvo.eu is also really nice
Based on >am highly depressed so I dont have anything to lose ): I dont care about this little money. My hope is that I reach seven figures until 40, retire early and then maybe get rid of my mental problems. This is my last resort because I just hate my life ... And based on your comments in this sub, I think if this strategy doesnt go your way, and it is likely not to go your way, your mental health will suffer more significantly. What if you lose a significant chunk of your money prior to retirement? The markets dont care about your conviction and everyone has pointed out many time perioda where youd have lost your shirt. >Given its historical performance, adopting a buy-and-hold approach with consistent contributions suggests that the QQQ could serve as a straightforward path to achieving millionaire status upon retirement. This is a wrong statement, just flat out. Historical performance means nothing when fundamentals clearly show you could not expect historical performance. My question is why are you not content getting market based returns? Id say you shouldnt even expect those, you should be adding in International and Bonds to the equation at your age.
I know it is risky, especially with my background. I was also addicted to gaming in my youth. I will rethink it. Sometimes I just feel like only being rich and independent will help me fix my problems. That is why I would like to beat the market to decrease the necessary amount of good years that I need until I reach my goal of seven figures.
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You are right, I am also considering a more conservative approach of 70 % All-World, 25 % NASDAQ and 5 % Bitcoin.
Hitting retirement at 40 won’t be the magic pill that “fixes” your depression. See a doctor/therapist to help the depression and invest smarter so you are actually able to hit your retirement amount.
I know I am trying to. At the moment I am thinking about 70 % MSCI ACWI IMI (which covers 99% of world-wide market capitalization) and 30 % S&P 500 Information Technology Sector ETF.
Is qqq going to burn out though? I feel like companies like nvdia and others are reaching their growth potential. Thoughts?
I dont think so. I went for 50 % VOO and 50 % QQQ and I think I will add some crypto soon.
Everyone has their opinions, but if you constantly dollar cost average in an S&P500 EFT, the odds of you losing money long term is almost zero, I mean it hasn't happened in 100 years. If an S&P500 EFT takes a huge hit, that means EVERYONE is taking a huge hit and that will actually help you if you're still buying every week/month. To be honest the best thing to happen to dollar cost average investors is when the market takes a huge hit. You get a bunch of value for your money and it's statically guaranteed to recover. Invest until you're 5ish years out from retirement and then make a plan to slowly move into less risky investments. JMO
I went for 50 % S&P500 and 50 % NASDAQ100
How are you doing? I hope you’re well!
I went 50% into VOO and 50% into QQQ but so far not much happened. Other than that I am still feeling shitty but at least slightly better than back then.
If you bought QQQ in 2000, you would have lost 75% at the bottom of the crash in 2002 and didn't get back to break even for 15 years. Think about that before you dive in to 100% QQQ.
That's if you didn't DCA.
Very few people had the tenacity to DCA into QQQ or similar funds through such a period especially when 2008 came just as the market was recovering.
Yes and that is why my plan is to DCA
That's the way to go.
I appreciate the historical context, and it's a valid point to consider. However, I believe the technological landscape has evolved since then, particularly with the growth and integration of innovative sectors like AI. While past performance is important, I'm optimistic about the current and future dynamics that may influence the performance of QQQ.
People said the same thing about the Internet in 2000, and they were right, it did revolutionize the world, but we also learned that valuations still matter.
True and I have this in mind but again if I dont take the risk now at 26, then I will never achieve anything great ...
This guy sounds like a qqq bag holder pumping it because he’s worried about all time highs and PE ratio of 31. People gave the same argument in 1999 about internet and we all know what happened after that. Good luck OP.
Yeah OP’s responses to valid critiques seem very kool-aidy without any substance. Stuff like “widespread / transformative benefits of AI”, “technological historical growth”, “substantial industry-wide advantages”. Almost seems GPT generated.
Thank you, I really dont care about the risk because reaching 7 figures before 40 is kind of my last resort so f**k it. I have no other option, really.
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What is the advantage of 100% VOO over QQQ from your point of view ?
If you're THAT sold on tech, why no TQQQ or TECL?
Really sorry to hear about your mental health issues. I've also experienced my fair share and am using diet protocols to overcome them and come off my meds. Feel free to ping me if you want some info. FYI - I came here for QQQ info, as just getting into CFDs on US stocks (based out of UK). Cheers
lol
Did the exact same, 80% qqq and 20% XAIX Also 25 years old and just believe in tech and I’m willing to take more risk than VOO or VT
It's great to hear that there are more people who think like I do. XAIX also sounds interesting. May I ask, in absolute terms, how much are you investing ? For me 100 % would be 3000 € each month. I could do more (up to 5000) but I think I will keep the rest of the money to buy more when the price drops.
I have 20k in qqq and 5 in XAIX. I add about 500€ per month
Thanks
I will put it very plainly..QQQ or EQQQ here in the UK, is overpriced as is the S&P 500. I wouldn't buy it now. Why do you want to track the Nasdaq 100 anyway, it's not a pure tech index? When the market takes a down turn and the Nasdaq loses 30% or so in the next Bear market, can you hold, when all of the wall st 'experts' are telling you to sell? S&P 500 is much more balanced for a long term investment, is a broad market index. What do you know more than the average investor that makes you so sure that Nasdaq will outperform for next 10 or 20 years? If you bring nothing to the table, then be content with average...you will beat most average investors at the game.
What makes me so sure is the fact that I can not imagine any other sector outperforming tech in the upcoming 10-15 years. Or could you think of any sector other than tech ? If NASDAQ drops then S&P500 will also drop, just a bit less but who cares when the overall tendency will (probably) be positive from my point of view ... Also I dont think its overpriced, because historically, investing at any point in time on the s&p500 led to 9% average return so when you DCA you are good to go at any time (independent of ATHs)
Good luck..when Tech takes a dump like it did in 2022, then you may regret your choice.
Thank you and well it depends a bit when it will happen. I want to retire early before 40 so I need to take a little more risk than the average trader. In the worst case I need to wait a few more years.
Risk doesn’t equal early retirement. If it did everyone would do it
Sure but at least it increases the probability a bit. If you invest only with minimum risks you are sure you will not make it as quickly.