Why don't we index the Nasdaq too?

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midareff
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Why don't we index the Nasdaq too?

Post by midareff » Tue Jun 12, 2018 4:49 pm

Just wondering.. we index the TSM, the S&P500, the TISM.. why not the Nasdaq? Fidelity has a fund that does that FWIW.

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Blueskies123
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Re: Why don't we index the Nasdaq too?

Post by Blueskies123 » Tue Jun 12, 2018 4:52 pm

It is called QQQ

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cfs
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Re: Why don't we index the Nasdaq too?

Post by cfs » Tue Jun 12, 2018 4:55 pm

Try
USAA Nasdaq 100 Index Fund (USNQX)
Power Shares QQQ
Good luck y gracias por leer ~cfs~
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alex_686
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Re: Why don't we index the Nasdaq too?

Post by alex_686 » Tue Jun 12, 2018 4:57 pm

First, what does FWIW mean?

Second, we find of do with the NASDAQ 100.

Third why index the NASDAQ when we don't the NYSE? The answer lies is asset classes. When you are creating a index you want to create a homogeneous asset class. You want to put things that are like each other with other things like each other. The stocks the NASDAQ and NYSE are pretty much alike. Now, go back 20 years and that was not exactly true. In the 80s NYSE was blue chips with high quality listing requirements, NASDAQ were small speculative Over The Counter stocks. In the 00s NASDAQ changed its listing requirements and courted risky tech start-ups. Now, today, both indexes have the same listing requirements. Sure, NASDAQ still skews tech, but that is a leftover echo from yesteryear.

Even when it was truly different, indexing by exchange would not be the best idea. Exchange would be a secondary or tertiary characteristic. Better to focus on what really matters - sector, size, factor, etc.

msk
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Re: Why don't we index the Nasdaq too?

Post by msk » Tue Jun 12, 2018 5:07 pm

Recall the dot com fever? I had a load of QQQ because I could not fathom which tech stock to go heavy on. Then the crash of the dot com bubble? If I recall correctly, I lost about 60%. Now I go Whole Market Whole World :greedy

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FrugalInvestor
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Re: Why don't we index the Nasdaq too?

Post by FrugalInvestor » Tue Jun 12, 2018 5:14 pm

alex_686 wrote:
Tue Jun 12, 2018 4:57 pm
First, what does FWIW mean?
For whatever it's worth FWIW means 'for whatever it's worth.' :happy
IGNORE the noise! | Our life is frittered away by detail... simplify, simplify. - Henry David Thoreau

columbia
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Re: Why don't we index the Nasdaq too?

Post by columbia » Tue Jun 12, 2018 5:36 pm

Why would one do so?

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grabiner
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Re: Why don't we index the Nasdaq too?

Post by grabiner » Tue Jun 12, 2018 6:58 pm

The problem with investing in the Nasdaq index is that it isn't an index of stocks with an investment-relevant characteristic. Small-cap stocks behave differently from large-cap stocks; therefore, you might want a small-cap index fund tracking the Russell 2000, or a large-cap index fund tracking the S&P 500. Likewise with growth versus value, or developed markets versus emerging markets, or long-term bonds versus short-term bonds.

But stocks don't behave differently just because they are listed on the Nasdaq or the NYSE. The Nasdaq does have more technology stocks, but if you want to invest in technology stocks, you can buy a fund specific to that industry.
Wiki David Grabiner

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nisiprius
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Re: Why don't we index the Nasdaq too?

Post by nisiprius » Tue Jun 12, 2018 8:49 pm

There is also a Fidelity ETF--yes, there are Fidelity ETFs--that tracks the NASDAQ composite index (as opposed to the NASDAQ 100). It's named ONEQ. The March 2018 factsheet shows it holding 985 stocks. Which is odd because NASDAQ says the index includes over 3,000 stocks. I'm too lazy to check the prospectus, but I assume they sample rather than replicate.

The sector breakdown is:

Image

So it's not quite half information technology. (If I were tempted to make that kind of bet I think I'd prefer to go with a pure play information technology sector index fund or ETF.)

I personally got caught up enough in the speculative fever to buy 23 shares of QQQ on 11/17/1999 for $3,428 and sell on 4/13/2000 for $4,247 (which past the peak and on the way down). The dot-bomb crash was truly spectacular and I decided that it had been a really move on my part and that I should never do anything like that again. And so far I haven't.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.

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Re: Why don't we index the Nasdaq too?

Post by MrPotatoHead » Tue Jun 12, 2018 9:14 pm

Blueskies123 wrote:
Tue Jun 12, 2018 4:52 pm
It is called QQQ
The OP needs to reach out to Bob Brinker and discuss the merits of the QQQ index - LOL!!!

MnD
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Re: Why don't we index the Nasdaq too?

Post by MnD » Tue Jun 12, 2018 9:40 pm

Blueskies123 wrote:
Tue Jun 12, 2018 4:52 pm
It is called QQQ
Since March 10, 1999. Magic 8-ball says go for it! What could go wrong?
Image

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Starchild
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Re: Why don't we index the Nasdaq too?

Post by Starchild » Tue Jun 12, 2018 10:16 pm

I have some QQQ, not much. I don't think it's a bad thing. Over time, the Nasdaq has had volatility, but has solidified its holdings more and overall returned well. Has a nice portfolio of stocks and gives an edge in your portfolio of FAANG stocks, if that's what you're feeling.

Tiger 385
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Re: Why don't we index the Nasdaq too?

Post by Tiger 385 » Tue Jun 12, 2018 10:29 pm

Can you add some context to this comment?

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JoMoney
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Re: Why don't we index the Nasdaq too?

Post by JoMoney » Wed Jun 13, 2018 4:13 am

midareff wrote:
Tue Jun 12, 2018 4:49 pm
Just wondering.. we index the TSM, the S&P500, the TISM.. why not the Nasdaq? Fidelity has a fund that does that FWIW.
In your own statement, you gave an example of an index fund that does. So quite obviously people do. Who is this "we" you speak of? What is the defining characteristic that defines the group you're referring to as "we"? Are you talking about people that follow the advice inspired by Jack Bogle? Have you heard or read about what his recommendations are?
"To achieve satisfactory investment results is easier than most people realize; to achieve superior results is harder than it looks." - Benjamin Graham

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midareff
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Re: Why don't we index the Nasdaq too?

Post by midareff » Wed Jun 13, 2018 6:35 am

JoMoney wrote:
Wed Jun 13, 2018 4:13 am
midareff wrote:
Tue Jun 12, 2018 4:49 pm
Just wondering.. we index the TSM, the S&P500, the TISM.. why not the Nasdaq? Fidelity has a fund that does that FWIW.
Have you heard or read about what his recommendations are?
Really Jo?

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nisiprius
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Re: Why don't we index the Nasdaq too?

Post by nisiprius » Wed Jun 13, 2018 7:11 am

JoMoney wrote:
Wed Jun 13, 2018 4:13 am
midareff wrote:
Tue Jun 12, 2018 4:49 pm
Just wondering.. we index the TSM, the S&P500, the TISM.. why not the Nasdaq? Fidelity has a fund that does that FWIW.
In your own statement, you gave an example of an index fund that does. So quite obviously people do.
$66 billion in QQQ. ($1.79 billion in ONEQ, Fidelity NASDAQ Composite ETF. A respectable amount.

Wow, it's almost exactly three times as much as people have invested in the Dow Jones Industrial Average ETF, DIA, $22 billion.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.

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nisiprius
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Re: Why don't we index the Nasdaq too?

Post by nisiprius » Wed Jun 13, 2018 7:13 am

midareff, seriously: why would someone want "a NASDAQ tilt" rather than "a tech tilt?" That is, why would one invest in a NASDAQ-tracking fund or ETF rather than an information technology sector ETF like VGT? Can you articulate some reasons? Do you personally feel that the tech companies that list on NASDAQ rather than NYSE have some common characteristic that makes them better in some way, for example?
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.

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