It will fail at some point. Current projections based on PE look like zero returns for the next five years. Side 6:willthrill81 wrote: ↑Sat Aug 22, 2020 2:35 pmInvesting in growth indices at any point in time would be considered by some to be performance chasing.rockstar wrote: ↑Sat Aug 22, 2020 2:24 pmYep.TheTimeLord wrote: ↑Sat Aug 22, 2020 11:44 amWhich is why I started using QQQ, not to have more Tech (explicitly) but to have less of certain sectors. Yesterday afternoon I started building the Jäger Fund and made my initial 4 purchases (no individual stocks in these initial purchases).Robot Monster wrote: ↑Sat Aug 22, 2020 10:57 amWhat are QQQ sectors, I wondered, versus what's in grandpa's fuddy-duddy S&P index.
Industrials & Utilities----------2.66%-----11% (7.90%+3.10%)
QQQ is missing S&P's: 2.5% Energy, 9.90% Financials, 2.50% Materials, 2.80% Real Estate and therefore missed out on this YTD action,
Real Estate -11.38%
After spending some time here, I get the gist of the responses. I don't think buying QQQ is chasing performance. You're buying what's working. If you go out and intentionally buy something that hasn't worked for a while, what do you call that? Value investing? What do you do if it performs even worse? Hold the course? I can see why folks will go out and buy the entire market. They'll get lower gains because they'll buy a whole lot of stuff that isn't working, but some fraction of what they buy will work. They'll make some return. Of course, this isn't really the case if you buy some international that hasn't worked for a long time. You can hope that some fraction of it works out. Of course, anything you buy at the top and hold to the bottom will do poorly whether it's QQQ, VOO, or GLD.
I'm sticking with buying what's working and holding until it fails. Then, I will bail with a plan to buy back in or buy something else. I'm not going to cash because we hit some new market highs.
My father has been a bona fide performance chaser for many years via mutual funds, and he's definitely outperformed the market. He doesn't even have a defined strategy, making it even more remarkable to me at least.
https://am.jpmorgan.com/blob-gim/138340 ... M_3Q20.pdf
What's important is to have a plan for when to bail. You will most likely lose money on recent purchases and incur capital gains tax on older purchases in taxable. But it's something to mentally prepare oneself for. I have no clue what will cause it to fail in the future. I didn't expect the market to rebound so fast this year. I received nasty grams from my 401k provider for excessive trading when I dump at the 300 day moving average and bought back in at a lower PE. I didn't expect to make so many moves so quickly. This stuff usually takes a bit more time.