Warren Buffett's 90/10 portfolio strategy using only QQQ and cash

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teelainen
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Warren Buffett's 90/10 portfolio strategy using only QQQ and cash

Post by teelainen »

We met an intelligent young man today who owns a small cell phone repair shop (he repairs cracked screens and does other small repairs).

He is only 28 years old, but he told me that he is a big fan of the Warren Buffett 90/10 portfolio strategy. However, instead of the S&P 500, he uses QQQ instead. He doesn't own any other stocks. The remaining 10% he puts in an online savings account with Ally Bank earning 0.50%.

The idea of using QQQ instead of the S&P 500 seems pretty brilliant. I personally never thought about it. If America does well and the S&P 500 does well, then chances are that QQQ will outperform.

Any thoughts on this strategy?
Marseille07
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Re: Warren Buffett's 90/10 portfolio strategy using only QQQ and cash

Post by Marseille07 »

I do something similar to this myself, splitting the stock portion between VOO and QQQ. I don't like the 10% being cash though, I use TLT instead.
IPS: 100/0 + EF. The US market always recovers. It’s never different this time. Investing is a simple game of rinse and repeat.
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Re: Warren Buffett's 90/10 portfolio strategy using only QQQ and cash

Post by secondopinion »

teelainen wrote: Wed Jan 20, 2021 3:31 pm The idea of using QQQ instead of the S&P 500 seems pretty brilliant. I personally never thought about it. If America does well and the S&P 500 does well, then chances are that QQQ will outperform.

Any thoughts on this strategy?
QQQ has no guarantee of doing better than the S&P; it merely takes more risks for a possibly better return. Maybe I suggest using VUG instead if it must be growth eccentric? At least the holdings are a little bit more diverse (not as tech heavy).
Last edited by secondopinion on Wed Jan 20, 2021 3:48 pm, edited 1 time in total.
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Re: Warren Buffett's 90/10 portfolio strategy using only QQQ and cash

Post by burritoLover »

It isn't a Warren Buffett strategy anymore than the 60/40 is the "Wolverine" strategy cause Hugh Jackman happens to invest that way. This was for the billions that Buffett's wife is inheriting anyway. Replacing it with QQQ just means you are more concentrated in large cap growth - you are less diversified and taking on more risk. QQQ can most certainly underperform the S&P 500 even though lately is has been bonkers.
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Re: Warren Buffett's 90/10 portfolio strategy using only QQQ and cash

Post by anon_investor »

burritoLover wrote: Wed Jan 20, 2021 3:48 pm It isn't a Warren Buffett strategy anymore than the 60/40 is the "Wolverine" strategy cause Hugh Jackman happens to invest that way. This was for the billions that Buffett's wife is inheriting anyway. Replacing it with QQQ just means you are more concentrated in large cap growth - you are less diversified and taking on more risk. QQQ can most certainly underperform the S&P 500 even though lately is has been bonkers.
100% TSLA, who needs cash :twisted:
newguy123
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Re: Warren Buffett's 90/10 portfolio strategy using only QQQ and cash

Post by newguy123 »

teelainen wrote: Wed Jan 20, 2021 3:31 pm We met an intelligent young man today who owns a small cell phone repair shop (he repairs cracked screens and does other small repairs).

He is only 28 years old, but he told me that he is a big fan of the Warren Buffett 90/10 portfolio strategy. However, instead of the S&P 500, he uses QQQ instead. He doesn't own any other stocks. The remaining 10% he puts in an online savings account with Ally Bank earning 0.50%.

The idea of using QQQ instead of the S&P 500 seems pretty brilliant. I personally never thought about it. If America does well and the S&P 500 does well, then chances are that QQQ will outperform.

Any thoughts on this strategy?
works until something like the dot com bubble happens. would of rather owned sp500 than qqq during the dot com bubble
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Re: Warren Buffett's 90/10 portfolio strategy using only QQQ and cash

Post by burritoLover »

anon_investor wrote: Wed Jan 20, 2021 3:49 pm
burritoLover wrote: Wed Jan 20, 2021 3:48 pm It isn't a Warren Buffett strategy anymore than the 60/40 is the "Wolverine" strategy cause Hugh Jackman happens to invest that way. This was for the billions that Buffett's wife is inheriting anyway. Replacing it with QQQ just means you are more concentrated in large cap growth - you are less diversified and taking on more risk. QQQ can most certainly underperform the S&P 500 even though lately is has been bonkers.
100% TSLA, who needs cash :twisted:
lol - my proposed modified Buffett portfolio - 90% TSLA, 10% BTC
"Your money is like a bar of soap. The more you handle it, the less you’ll have." - Gene Fama
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Re: Warren Buffett's 90/10 portfolio strategy using only QQQ and cash

Post by Pandemic Bangs »

teelainen wrote: Wed Jan 20, 2021 3:31 pm ... big fan of the Warren Buffett 90/10 portfolio strategy.
Was wondering which piece was the QQQ for this safe strategy. :D
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Re: Warren Buffett's 90/10 portfolio strategy using only QQQ and cash

Post by Fclevz »

I doubt Warren would be thrilled about a change from the S&P 500 to QQQ.
QQQ doesn't seem to be a real index. What's the basis for the index construction, just being on the NASDAQ? Its construction doesn't really make much sense. It's made up of the 100 largest non-financial companies on the NASDAQ, and along with ignoring financials, it also has zero in the materials sector, zero in real estate, zero in energy.
Warren is going for a stock index that covers the diversified U.S. economy. QQQ ain't it.
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Re: Warren Buffett's 90/10 portfolio strategy using only QQQ and cash

Post by Makefile »

teelainen wrote: Wed Jan 20, 2021 3:31 pm The idea of using QQQ instead of the S&P 500 seems pretty brilliant. I personally never thought about it. If America does well and the S&P 500 does well, then chances are that QQQ will outperform.

Any thoughts on this strategy?
QQQ means NASDAQ-100:
  • Only stocks listed on NASDAQ are included. Stocks on the NYSE are not. Why would that be brilliant? If you're looking for tech stocks then Vanguard Information Technology ETF (VGT) might be a more logical choice.
  • Only 100 stocks are included shifting it toward bigger companies. Should you want mega cap companies instead of the S&P 500 you could use something like Vanguard Mega Cap ETF (MGC) which has 235 mega stocks.
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Re: Warren Buffett's 90/10 portfolio strategy using only QQQ and cash

Post by Jags4186 »

Since 2000, QQQ has underperformed the US Total Stock Market, VTSMX. In fact, it has *significantly* underperformed VTSMX prior to 2020. QQQ just had an incredible run up in 2020.
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Re: Warren Buffett's 90/10 portfolio strategy using only QQQ and cash

Post by JSPECO9 »

Not as diversified and historically near identical returns. When you adjust for risk, QQQ has done a lot worse. I will pass and stick with S&P 500. If you can stick with QQQ forever I'm sure it'll work out fine though.
Makefile
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Re: Warren Buffett's 90/10 portfolio strategy using only QQQ and cash

Post by Makefile »

Fclevz wrote: Wed Jan 20, 2021 4:00 pm QQQ doesn't seem to be a real index. What's the basis for the index construction, just being on the NASDAQ? Its construction doesn't really make much sense.
Yeah, I think the idea of QQQ is to be able to track "the NASDAQ" which was hyped a lot during the dot com boom.
Fun fact: a Q at the end of a ticker normally means bankrupt, so I wonder why this one was so appealing to use?
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Re: Warren Buffett's 90/10 portfolio strategy using only QQQ and cash

Post by anon_investor »

burritoLover wrote: Wed Jan 20, 2021 3:52 pm
anon_investor wrote: Wed Jan 20, 2021 3:49 pm
burritoLover wrote: Wed Jan 20, 2021 3:48 pm It isn't a Warren Buffett strategy anymore than the 60/40 is the "Wolverine" strategy cause Hugh Jackman happens to invest that way. This was for the billions that Buffett's wife is inheriting anyway. Replacing it with QQQ just means you are more concentrated in large cap growth - you are less diversified and taking on more risk. QQQ can most certainly underperform the S&P 500 even though lately is has been bonkers.
100% TSLA, who needs cash :twisted:
lol - my proposed modified Buffett portfolio - 90% TSLA, 10% BTC
I like it! In 10 years we should compared $10k invested in 90% TSLA / 10% BTC vs. 90% S&P500 / 10% cash vs. 90% QQQ / 10% cash and see which is better.
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Re: Warren Buffett's 90/10 portfolio strategy using only QQQ and cash

Post by finite_difference »

burritoLover wrote: Wed Jan 20, 2021 3:52 pm
anon_investor wrote: Wed Jan 20, 2021 3:49 pm
burritoLover wrote: Wed Jan 20, 2021 3:48 pm It isn't a Warren Buffett strategy anymore than the 60/40 is the "Wolverine" strategy cause Hugh Jackman happens to invest that way. This was for the billions that Buffett's wife is inheriting anyway. Replacing it with QQQ just means you are more concentrated in large cap growth - you are less diversified and taking on more risk. QQQ can most certainly underperform the S&P 500 even though lately is has been bonkers.
100% TSLA, who needs cash :twisted:
lol - my proposed modified Buffett portfolio - 90% TSLA, 10% BTC
Isn’t that the official Warren Buffet FOMO YOLO portfolio?

:mrgreen:
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Re: Warren Buffett's 90/10 portfolio strategy using only QQQ and cash

Post by newguy123 »

anon_investor wrote: Wed Jan 20, 2021 4:12 pm
burritoLover wrote: Wed Jan 20, 2021 3:52 pm
anon_investor wrote: Wed Jan 20, 2021 3:49 pm
burritoLover wrote: Wed Jan 20, 2021 3:48 pm It isn't a Warren Buffett strategy anymore than the 60/40 is the "Wolverine" strategy cause Hugh Jackman happens to invest that way. This was for the billions that Buffett's wife is inheriting anyway. Replacing it with QQQ just means you are more concentrated in large cap growth - you are less diversified and taking on more risk. QQQ can most certainly underperform the S&P 500 even though lately is has been bonkers.
100% TSLA, who needs cash :twisted:
lol - my proposed modified Buffett portfolio - 90% TSLA, 10% BTC
I like it! In 10 years we should compared $10k invested in 90% TSLA / 10% BTC vs. 90% S&P500 / 10% cash vs. 90% QQQ / 10% cash and see which is better.
throw 90% TQQQ (triple QQQ) and 10% cash in there as well, lets see what leverage does :happy
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Re: Warren Buffett's 90/10 portfolio strategy using only QQQ and cash

Post by anon_investor »

newguy123 wrote: Wed Jan 20, 2021 4:14 pm
anon_investor wrote: Wed Jan 20, 2021 4:12 pm
burritoLover wrote: Wed Jan 20, 2021 3:52 pm
anon_investor wrote: Wed Jan 20, 2021 3:49 pm
burritoLover wrote: Wed Jan 20, 2021 3:48 pm It isn't a Warren Buffett strategy anymore than the 60/40 is the "Wolverine" strategy cause Hugh Jackman happens to invest that way. This was for the billions that Buffett's wife is inheriting anyway. Replacing it with QQQ just means you are more concentrated in large cap growth - you are less diversified and taking on more risk. QQQ can most certainly underperform the S&P 500 even though lately is has been bonkers.
100% TSLA, who needs cash :twisted:
lol - my proposed modified Buffett portfolio - 90% TSLA, 10% BTC
I like it! In 10 years we should compared $10k invested in 90% TSLA / 10% BTC vs. 90% S&P500 / 10% cash vs. 90% QQQ / 10% cash and see which is better.
throw 90% TQQQ (triple QQQ) and 10% cash in there as well, lets see what leverage does :happy
Just waiting for the triple leveraged BTC ETF...
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Re: Warren Buffett's 90/10 portfolio strategy using only QQQ and cash

Post by alex_686 »

Makefile wrote: Wed Jan 20, 2021 4:10 pm
Fclevz wrote: Wed Jan 20, 2021 4:00 pm QQQ doesn't seem to be a real index. What's the basis for the index construction, just being on the NASDAQ? Its construction doesn't really make much sense.
Yeah, I think the idea of QQQ is to be able to track "the NASDAQ" which was hyped a lot during the dot com boom.
Fun fact: a Q at the end of a ticker normally means bankrupt, so I wonder why this one was so appealing to use?
For NASDAQ, I think the rule is that a 5th additional letter of Q is tacked on, I don't think that is the rule for the NYSE. It was launched as QQQ, hence its nickname "Q cubed", which has a ring.
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Re: Warren Buffett's 90/10 portfolio strategy using only QQQ and cash

Post by alex_686 »

I have a dim view of this.

The S&P is a broad based index that more or less replicates the market. There may be better large cap domestic indexes and maybe a global index would be better - but this is small cheese compared to the QQQQ.

What is the QQQQ? Is it the biggest hottest tech companies? Well, no. It excludes a fair number of those. It is kind of a random grab bag of companies. The quality of the index is low.

Why chose QQQQ over S&P 500? Which metric is the person using? P/E ratios? Earnings Growth? Or is it because it has done well recently? Is it because it is full of sexy hot sizzling companies? What about the 60% drop in 1999-2001, while the S&P only dropped by 7%.
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Re: Warren Buffett's 90/10 portfolio strategy using only QQQ and cash

Post by Scooter57 »

QQQ isn't just growth stocks. Its a pretty random mix with stuff like railroads mixed with the tech names. It was cheaper to list there years ago so many non tech stocks did. Take a look at the full holdings of QQQ and you will see what I mean.

I like its quirkiness but would not invest now because of the overvaluation at the top. Someday, though. It is newer companies on the whole and I like that. The S&P has a lot of stolid older companies not likely to grow much, bought mostly for the dividends.
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Re: Warren Buffett's 90/10 portfolio strategy using only QQQ and cash

Post by Ferdinand2014 »

I would never consider such a proposal. Is this the equivalent of the Kennedy shoe shine boy story? Maybe we are in a bubble.
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Re: Warren Buffett's 90/10 portfolio strategy using only QQQ and cash

Post by nisiprius »

No, it isn't "brilliant" to say you admire a strategy and then not follow the strategy you say you admire.

Even if it made sense for
--a 28-year-old investor retirement saver with (let's say) a six-figure net worth, to follow a strategy meant for the management of--
--a 70-year-old widow's multibillion dollar inheritance...

...if Warren Buffett wanted his trustees to use 90% QQQ, he would have said so.

If he wants to invest 90% in QQQ it's his money and his life and he has the right to do it. But he does not have the right to call this "the Warren Buffett 90/10 portfolio strategy" when it is simply isn't.
Last edited by nisiprius on Wed Jan 20, 2021 5:35 pm, edited 2 times in total.
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Re: Warren Buffett's 90/10 portfolio strategy using only QQQ and cash

Post by ronno2018 »

I have a bit of VUG and looking at it these past several months I am tempted to buy more -- BUT I am telling myself that my asset allocation is fine and I do not have to chase returns as tempting as it appears. Plus I think there will be a pretty significant tech correction when the world is pandemic free (or maybe not).
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Re: Warren Buffett's 90/10 portfolio strategy using only QQQ and cash

Post by nisiprius »

It's a technical detail, but, no, Warren Buffett did not say to put the 10% in cash. It's not that hard to find out what Buffett said. It's here:Berkshire Hathaway 2013 Annual Report
....What I advise here is essentially identical to certain instructions I’ve laid out in my will. One bequest provides that cash will be delivered to a trustee for my wife’s benefit. (I have to use cash for individual bequests, because all of my Berkshire shares will be fully distributed to certain philanthropic organizations over the ten years following the closing of my estate.) My advice to the trustee could not be more simple: Put 10% of the cash in short-term government bonds and 90% in a very low-cost S&P 500 index fund. (I suggest Vanguard’s.)
The bequest is in the form of cash but none of it is to be left in cash. 10% of it is to be invested in short-term government bonds and 90% in "a very low-cost S&P 500 index fund. (I suggest Vanguard's.)" That's perfectly specific.

Warren Buffett's 90/10 portfolio strategy is specifically an S&P 500 index fund, and the rest, not in cash, but in short-term government bonds.
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Re: Warren Buffett's 90/10 portfolio strategy using only QQQ and cash

Post by wolf359 »

nisiprius wrote: Wed Jan 20, 2021 4:41 pm Even if it made sense for
--a 28-year-old investor retirement saver with (let's say) a six-figure net worth, to follow a strategy meant for the management of--
--a 70-year-old widow's multibillion dollar inheritance...

...if Warren Buffett wanted his trustees to use 90% QQQ, he would have said so.

If he wants to invest 90% in QQQ it's his money and his life and he has the right to do it. But he does not have the right to call this "the Warren Buffett 90/10 portfolio strategy" when it is simply isn't.
I think a more accurate term is the barbell strategy. Barbells don't have to be 50/50, but they mix risky assets with conservative assets, with nothing in between.
Last edited by wolf359 on Wed Jan 20, 2021 5:19 pm, edited 1 time in total.
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Re: Warren Buffett's 90/10 portfolio strategy using only QQQ and cash

Post by Carguy85 »

burritoLover wrote: Wed Jan 20, 2021 3:52 pm
anon_investor wrote: Wed Jan 20, 2021 3:49 pm
burritoLover wrote: Wed Jan 20, 2021 3:48 pm It isn't a Warren Buffett strategy anymore than the 60/40 is the "Wolverine" strategy cause Hugh Jackman happens to invest that way. This was for the billions that Buffett's wife is inheriting anyway. Replacing it with QQQ just means you are more concentrated in large cap growth - you are less diversified and taking on more risk. QQQ can most certainly underperform the S&P 500 even though lately is has been bonkers.



100% TSLA, who needs cash :twisted:
lol - my proposed modified Buffett portfolio - 90% TSLA, 10% BTC

Lol too funny thanks for the laugh!!
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Re: Warren Buffett's 90/10 portfolio strategy using only QQQ and cash

Post by Brianmcg321 »

burritoLover wrote: Wed Jan 20, 2021 3:52 pm
anon_investor wrote: Wed Jan 20, 2021 3:49 pm
burritoLover wrote: Wed Jan 20, 2021 3:48 pm It isn't a Warren Buffett strategy anymore than the 60/40 is the "Wolverine" strategy cause Hugh Jackman happens to invest that way. This was for the billions that Buffett's wife is inheriting anyway. Replacing it with QQQ just means you are more concentrated in large cap growth - you are less diversified and taking on more risk. QQQ can most certainly underperform the S&P 500 even though lately is has been bonkers.
100% TSLA, who needs cash :twisted:
lol - my proposed modified Buffett portfolio - 90% TSLA, 10% BTC
Hey, if its good enough for Buffett its good enough for me. :moneybag :moneybag :moneybag :moneybag
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Re: Warren Buffett's 90/10 portfolio strategy using only QQQ and cash

Post by Marseille07 »

Unsurprisingly, lots of negative views on QQQ. Just do a hybrid like I'm doing. You don't have to choose between 100% S&P or 100% QQQ. Splitting in some fashion is totally valid.
IPS: 100/0 + EF. The US market always recovers. It’s never different this time. Investing is a simple game of rinse and repeat.
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Re: Warren Buffett's 90/10 portfolio strategy using only QQQ and cash

Post by Nicolas »

burritoLover wrote: Wed Jan 20, 2021 3:48 pm It isn't a Warren Buffett strategy anymore than the 60/40 is the "Wolverine" strategy cause Hugh Jackman happens to invest that way. This was for the billions that Buffett's wife is inheriting anyway. Replacing it with QQQ just means you are more concentrated in large cap growth - you are less diversified and taking on more risk. QQQ can most certainly underperform the S&P 500 even though lately is has been bonkers.
This is true but I remember Buffett recommending something similar to ordinary people. He recommended keeping enough cash “to be comfortable” and putting the rest into the Vanguard S&P 500 index fund, and he specifically mentioned Vanguard. So maybe he didn’t say 90/10 but could possibly be some other ratio, “to be comfortable”.
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Re: Warren Buffett's 90/10 portfolio strategy using only QQQ and cash

Post by Nicolas »

burritoLover wrote: Wed Jan 20, 2021 3:52 pm
anon_investor wrote: Wed Jan 20, 2021 3:49 pm
burritoLover wrote: Wed Jan 20, 2021 3:48 pm It isn't a Warren Buffett strategy anymore than the 60/40 is the "Wolverine" strategy cause Hugh Jackman happens to invest that way. This was for the billions that Buffett's wife is inheriting anyway. Replacing it with QQQ just means you are more concentrated in large cap growth - you are less diversified and taking on more risk. QQQ can most certainly underperform the S&P 500 even though lately is has been bonkers.
100% TSLA, who needs cash :twisted:
lol - my proposed modified Buffett portfolio - 90% TSLA, 10% BTC
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Re: Warren Buffett's 90/10 portfolio strategy using only QQQ and cash

Post by anon_investor »

Scooter57 wrote: Wed Jan 20, 2021 4:34 pm QQQ isn't just growth stocks. Its a pretty random mix with stuff like railroads mixed with the tech names. It was cheaper to list there years ago so many non tech stocks did. Take a look at the full holdings of QQQ and you will see what I mean.

I like its quirkiness but would not invest now because of the overvaluation at the top. Someday, though. It is newer companies on the whole and I like that. The S&P has a lot of stolid older companies not likely to grow much, bought mostly for the dividends.
What about QQQJ?
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Re: Warren Buffett's 90/10 portfolio strategy using only QQQ and cash

Post by abuss368 »

I would not consider this. Warren Buffet specifically mentioned two asset classes. S&P 500 and Treasury Bonds/Cash.

Keep it simple.

Your strategy may or may not pay off.

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Re: Warren Buffett's 90/10 portfolio strategy using only QQQ and cash

Post by Scooter57 »

anon_investor wrote: Wed Jan 20, 2021 6:27 pm
Scooter57 wrote: Wed Jan 20, 2021 4:34 pm QQQ isn't just growth stocks. Its a pretty random mix with stuff like railroads mixed with the tech names. It was cheaper to list there years ago so many non tech stocks did. Take a look at the full holdings of QQQ and you will see what I mean.

I like its quirkiness but would not invest now because of the overvaluation at the top. Someday, though. It is newer companies on the whole and I like that. The S&P has a lot of stolid older companies not likely to grow much, bought mostly for the dividends.
What about QQQJ?
QQQJ is the new ETF that includes stocks smaller than those in the NASDAQ 100 that make up QQQ. It is not a trust, either, as QQQ is.

I had a look at it, but it would only make sense to own it if you also owned QQQM as otherwise any time a stock got really successful you'd lose it from the index.

And I would also wait until both funds were older and larger as they don't have all that much AUM right now or trade that much volume.
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