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

Discuss all general (i.e. non-personal) investing questions and issues, investing news, and theory.
secondopinion
Posts: 2909
Joined: Wed Dec 02, 2020 1:18 pm

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

Post by secondopinion »

Valuethinker wrote: Fri May 13, 2022 8:13 am
nisiprius wrote: Fri May 13, 2022 8:02 am If the 90% is QQQ then it isn't Warren Buffett's strategy.

I have to gripe about name-dropping a celebrity in support of a strategy that the celebrity does not support.

I challenge anybody to find anything, in the Berkshire Hathaway shareholder reports or elsewhere, where he even mentions QQQ. At all.

On the other hand, he frequently mentions, praises, and recommends "an S&P 500 index fund" and quite often will even add a reference to Vanguard, as in the 2013 annual report:
My money, I should add, is where my mouth is: What I advise here is essentially identical to certain instructions I’ve laid out in my will... 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.)
If he'd meant "or QQQ" he could have said so. If he'd meant "90/10 is what's important, any decent stock fund will do for the 90" he could have said so. His references and praise specifically for S&P 500 index funds have been frequent and consistent.

I'm not one of those who is confident they know what "Warren" really means. I have not yet heard an explanation in his own words of whether the recommendation of an S&P 500 fund is intended to be a recommendation against total stock funds, factor tilts, or international stocks. I don't believe it is even clear that he is recommending the specific portfolio (90/10, 90% in an S&P 500 index fund and 10% in short-term government bonds) as a good all-purpose retirement savings portfolio.

But I feel very confident that Warren Buffett has never recommended QQQ.
Nor does he need to.

At one point 40% (it was 20% and it might be less than that, now) of the value of Berkshire Hathaway could be accounted for by the value of its stake in Apple-- if you took the value of the stake in Apple over the BH market capitalisation.*

If one were "tracking" Buffett, one would hold Apple - alone amongst all the tech stocks. Despite being a close friend of Bill Gates, AFAIK Buffett has never held a significant stake in MSFT.

That position is presumably based on a level of contact with company management and analysis that no individual investor could hope to replicate. And even Buffett gets it expensively wrong - he said in retrospect he way overpaid for Precision Castparts (aerospace supplier).

* I am guessing Enterprise Value = net debt + market cap is meaningless for BH because of its large insurance operations.
If it were my sibling, this would also be true that only Apple would be bought of tech. :P

But yes, using QQQ is a bad idea for the risks; I do not think there would be much of a premium even if it exists.
Passive investing: not about making big bucks but making profits. Active investing: not about beating the market but meeting goals. Speculation: not about timing the market but taking profitable risks.
Marseille07
Posts: 9241
Joined: Fri Nov 06, 2020 1:41 pm

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

Post by Marseille07 »

hiddenpower wrote: Fri May 13, 2022 7:40 am I see. Well is there a more aggressive "simple" version of VOO then for a taxable? I guess maybe SSO. NTSX seems way to mild (1% gain for risk of bond correlation)
If you're in accumulation then SSO might work. But in retirement, you don't want SSO because you might be forced to sell SSO when it is -80% from ATH, which would dramatically bump your effective withdrawal rate. This is when you lose all the advantage SSO may have given you over VOO up to that point.
85% US + FM + RSU | 15% Cash
Kbg
Posts: 219
Joined: Thu Mar 23, 2017 11:33 am

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

Post by Kbg »

hiddenpower wrote: Fri May 13, 2022 8:52 am
Kbg wrote: Fri May 13, 2022 8:43 am The n100 isn’t all tech anymore. Check out the current holdings. It’s the 100 largest companies that list on the Nasdaq and the Nasdaq is generally considered a better place to list vs the NYSE these days.

No doubt a more concentrated index. I think a better comparison is with the S&P 100.
Completely agree. It seems the S&P100 performs about the same as S&P500 though. So what's your thought on this strat?
All I know is what I see in the historical data. As a general rule the N100 just performs better and draws down more, but not much more (usually). If one uses the symbol RYOCX you can take a backtest back to 1995 which factors in the Nasdaq dotcom crash. 2.5%ish cagr outperform since 1995, throw in a 81% drawdown and still have that much out performance!?! I'll just say I'm a nasdaq man and always have been. (RYOCX comes with a nice 1.33% mngt fee as well...so there's quite the handicap when looking at the results)

I think backtesting from 2004 is a reasonable place to do a good comparison. The insanely good early Nasdaq years are gone and the 2003 post crash 48% single year pop is gone.

The S1 vs S5 is pretty straight forward...both are cap weighted and the top 15-20 are pretty much the entire index either way. The next 400 in the S5 are slightly more than rounding error. The 101st stock in the S5 has a weight of .219, the 21st is .755 and #1 Apple is at 6.65...meanwhile #500 is .01373.

I think it is fair to say the N1 is more weighted to technology...but that's ok.

I also think there isn't a right or wrong answer here.
Kbg
Posts: 219
Joined: Thu Mar 23, 2017 11:33 am

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

Post by Kbg »

secondopinion wrote: Fri May 13, 2022 9:58 am But yes, using QQQ is a bad idea for the risks; I do not think there would be much of a premium even if it exists.
After the semi-colon...100% incorrect.

Since the start of the NDX the outperformance cagr is over 4% as compared to the SPX.

Most people backtest with the QQQ because that's all they have available and if that is your start date then yes this is accurate. Try virtually any other date and it's just plain wrong.

If you want something that isn't time biased look at the rolling year comparisons on Portfolio Visualizer...QQQ is simply a far superior ETF in terms of performance over SPY.

Bottom line...if the future is similar to the past you are giving up about 3% per year.
secondopinion
Posts: 2909
Joined: Wed Dec 02, 2020 1:18 pm

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

Post by secondopinion »

Kbg wrote: Fri May 13, 2022 9:55 pm
secondopinion wrote: Fri May 13, 2022 9:58 am But yes, using QQQ is a bad idea for the risks; I do not think there would be much of a premium even if it exists.
After the semi-colon...100% incorrect.

Since the start of the NDX the outperformance cagr is over 4% as compared to the SPX.

Most people backtest with the QQQ because that's all they have available and if that is your start date then yes this is accurate. Try virtually any other date and it's just plain wrong.

If you want something that isn't time biased look at the rolling year comparisons on Portfolio Visualizer...QQQ is simply a far superior ETF in terms of performance over SPY.

Bottom line...if the future is similar to the past you are giving up about 3% per year.
Maybe a premium does exist, but you can concur that the risks are higher, right? But ultimately, claiming a premium or the lack thereof is speculative; whether one is a supporter or a doubter, it is speculation.
Passive investing: not about making big bucks but making profits. Active investing: not about beating the market but meeting goals. Speculation: not about timing the market but taking profitable risks.
strummer6969
Posts: 104
Joined: Tue Dec 15, 2020 11:59 am

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

Post by strummer6969 »

Kbg wrote: Fri May 13, 2022 9:26 pm All I know is what I see in the historical data. As a general rule the N100 just performs better and draws down more, but not much more (usually). If one uses the symbol RYOCX you can take a backtest back to 1995 which factors in the Nasdaq dotcom crash. 2.5%ish cagr outperform since 1995, throw in a 81% drawdown and still have that much out performance!?! I'll just say I'm a nasdaq man and always have been. (RYOCX comes with a nice 1.33% mngt fee as well...so there's quite the handicap when looking at the results)
How much of that outperformance was post-2008? I think all of it. Tech has been the biggest beneficiary of low rates since the GFC. That regime could change.

Backtesting shows it could work out but it can have extreme drawdowns and long time to recover. If you're young maybe that's fine but I'd hate to be near retirement holding a fund that's just dropped 81% and might take 10-15 years to recover.
User avatar
nisiprius
Advisory Board
Posts: 46543
Joined: Thu Jul 26, 2007 9:33 am
Location: The terrestrial, globular, planetary hunk of matter, flattened at the poles, is my abode.--O. Henry

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

Post by nisiprius »

Kbg wrote: Fri May 13, 2022 9:55 pm...If you want something that isn't time biased look at the rolling year comparisons on Portfolio Visualizer...QQQ is simply a far superior ETF in terms of performance over SPY.

Bottom line...if the future is similar to the past you are giving up about 3% per year...
I did. I'm not seeing what you say I should see.

QQQ hasn't been any better than SPY. It's just been a way of taking more risk. There's would have been no benefit to using QQQ instead of SPY unless you were willing to exceed the amount of risk Warren Buffett wants for his wife.

1) I am only seeing a 1.5% difference in CAGR, not the 3% you are quoting. (1.0873/1.0711 = 1.0151). What am I doing differently from you?

Source

Image

2) I'm seeing virtually identical Sharpe and Sortino ratios. The return is no more than commensurate with the additional risk. What tiny difference there is favors SPY.

3) Assume you do not want to take more risk than Warren Buffett's plans for his wife. You can't invest 90/10 in QQQ without taking much more risk. If you don't want to blow past Warren Buffett's risk budget, you need to use less QQQ.

Here are PortfolioVisualizer comparisons in which I'm using CASHX (3-month Treasury bills) for "short-term government bonds." The red line is Buffett's 90/10, using SPY. The others use QQQ.

Source

Image

The red line assumes we don't want to see any more short-term volatility than we would have seen in a 90/10 SPY portfolio. In order to achieve this we need to cut the QQQ allocation to 56.5%.

The yellow line assumes we don't want see a deeper drawdown than we would have seen in a 90/10 SPY portfolio. In order to achieve this we need to cut the 45%.

In both cases, we end up with lower returns and less money.

On the historical evidence, you couldn't have beaten SPY with QQQ unless you were williing to take more risk than Warren Buffett wants for his wife.
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.
Marseille07
Posts: 9241
Joined: Fri Nov 06, 2020 1:41 pm

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

Post by Marseille07 »

nisiprius wrote: Sat May 14, 2022 9:08 am
Kbg wrote: Fri May 13, 2022 9:55 pm...If you want something that isn't time biased look at the rolling year comparisons on Portfolio Visualizer...QQQ is simply a far superior ETF in terms of performance over SPY.

Bottom line...if the future is similar to the past you are giving up about 3% per year...
I did. I'm not seeing what you say I should see.

QQQ hasn't been any better than SPY. It's just been a way of taking more risk. There's would have been no benefit to using QQQ instead of SPY unless you were willing to exceed the amount of risk Warren Buffett wants for his wife.

1) I am only seeing a 1.5% difference in CAGR, not the 3% you are quoting. (1.0873/1.0711 = 1.0151). What am I doing differently from you?

Source

Image

2) I'm seeing virtually identical Sharpe and Sortino ratios. The return is no more than commensurate with the additional risk. What tiny difference there is favors SPY.

3) Assume you do not want to take more risk than Warren Buffett's plans for his wife. You can't invest 90/10 in QQQ without taking much more risk. If you don't want to blow past Warren Buffett's risk budget, you need to use less QQQ.

Here are PortfolioVisualizer comparisons in which I'm using CASHX (3-month Treasury bills) for "short-term government bonds." The red line is Buffett's 90/10, using SPY. The others use QQQ.

Source

Image

The red line assumes we don't want to see any more short-term volatility than we would have seen in a 90/10 SPY portfolio. In order to achieve this we need to cut the QQQ allocation to 56.5%.

The yellow line assumes we don't want see a deeper drawdown than we would have seen in a 90/10 SPY portfolio. In order to achieve this we need to cut the 45%.

In both cases, we end up with lower returns and less money.

On the historical evidence, you couldn't have beaten SPY with QQQ unless you were williing to take more risk than Warren Buffett wants for his wife.
NASDAQ is better if you include the late 90s - which QQQ does not, but you need to find the NASDAQ data going back to 1972 or whenever they started.

I do not recommend QQQ because it only represents 100 companies, not 500 or the entire NASDAQ market. If there is such a product then I would look, but not QQQ.
85% US + FM + RSU | 15% Cash
av111
Posts: 399
Joined: Mon Jan 26, 2015 1:27 pm

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

Post by av111 »

I think that if you can stay invested during long winters (hard because volatility makes you question your decision) , qqq could give you more return but if you depend on selling it to pay for expenses (retired), you will be happier in 60/40
AV111
Kbg
Posts: 219
Joined: Thu Mar 23, 2017 11:33 am

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

Post by Kbg »

I deleted a much longer post…i suggest anyone who wants to examine things go to PV and use the symbol ryocx. This will take a comparative backtest back to 1994 which is the earliest investment vehicle I’m aware of for direct investment in the n100. This compared to spy is an apples to apples comparison. If one wants to focus on 1999-2003 the worst it could get for the n1, then certainly one should run the numbers on a broad market index from 1929-1933.
Marseille07
Posts: 9241
Joined: Fri Nov 06, 2020 1:41 pm

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

Post by Marseille07 »

Kbg wrote: Sat May 14, 2022 6:29 pm I deleted a much longer post…i suggest anyone who wants to examine things go to PV and use the symbol ryocx. This will take a comparative backtest back to 1994 which is the earliest investment vehicle I’m aware of for direct investment in the n100. This compared to spy is an apples to apples comparison. If one wants to focus on 1999-2003 the worst it could get for the n1, then certainly one should run the numbers on a broad market index from 1929-1933.
I've seen something like that. The problem is that the MaxDD is -81% during the dot com. Sure QQQ's CAGR may be higher, but I'd rather take S&P with -50% DD.
85% US + FM + RSU | 15% Cash
Northern Flicker
Posts: 10434
Joined: Fri Apr 10, 2015 12:29 am

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

Post by Northern Flicker »

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?
18 years ago, energy stocks, not tech stocks were the can’t miss darlings. Sector concentration based on recency bias actually has a very plausible chance of underperformance. Nobody knows which sectors will underperform or overperform. The whole point of Mr. Buffett’s recommendation was not to make active decisions, such as selecting QQQ as an equity portfolio.
Last edited by Northern Flicker on Sat May 14, 2022 6:58 pm, edited 1 time in total.
My postings are my opinion, and never should be construed as a recommendation to buy, sell, or hold any particular investment.
Kbg
Posts: 219
Joined: Thu Mar 23, 2017 11:33 am

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

Post by Kbg »

Marseille07 wrote: Sat May 14, 2022 6:32 pm
Kbg wrote: Sat May 14, 2022 6:29 pm I deleted a much longer post…i suggest anyone who wants to examine things go to PV and use the symbol ryocx. This will take a comparative backtest back to 1994 which is the earliest investment vehicle I’m aware of for direct investment in the n100. This compared to spy is an apples to apples comparison. If one wants to focus on 1999-2003 the worst it could get for the n1, then certainly one should run the numbers on a broad market index from 1929-1933.
I've seen something like that. The problem is that the MaxDD is -81% during the dot com. Sure QQQ's CAGR may be higher, but I'd rather take S&P with -50% DD.
My “ya but” is if we are going to focus on “the worst” then the worst for broad market was -90% over a very similar time period in length.

Everyone should invest where and how they feel comfortable and that’s really the bottom line for all of us.

However, when killing time on an investment board I like to poke at folks who ignore some data to make a point. Of course I’m talking reward mainly and the response is oriented to risk vs reward. Using my suggestion pv’s +2.51 CAGR for a -.05 sharpe is a preference. :sharebeer
Kbg
Posts: 219
Joined: Thu Mar 23, 2017 11:33 am

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

Post by Kbg »

Northern Flicker wrote: Sat May 14, 2022 6:45 pm 18 years ago, energy stocks, not tech stocks were the can’t miss darlings. Sector concentration based on recency bias actually has a very plausible chance of underperformance. Nobody knows which sectors will underperform or over perform. The whole point of Mr. Buffett’s recommendation was not to make active decisions, such as selecting QQQ as an equity portfolio.
I like what Meb Faber says…anything other than a total global portfolio is an active bet. Qqq is no more active than spy. It IS a narrower index based on where a stock is listed. The fact is both have been and are currently largely driven by the tech sector.

Here’s an idea that works reasonably well…50/50 QQQ and IJS.

Paces spy always with the occasional nice burst of outperformance and better risk/return metrics.
Marseille07
Posts: 9241
Joined: Fri Nov 06, 2020 1:41 pm

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

Post by Marseille07 »

Kbg wrote: Sat May 14, 2022 6:54 pm My “ya but” is if we are going to focus on “the worst” then the worst for broad market was -90% over a very similar time period in length.

Everyone should invest where and how they feel comfortable and that’s really the bottom line for all of us.

However, when killing time on an investment board I like to poke at folks who ignore some data to make a point. Of course I’m talking reward mainly and the response is oriented to risk vs reward. Using my suggestion pv’s +2.51 CAGR for a -.05 sharpe is a preference. :sharebeer
I sort of assume away 1929; my hope is that the Fed has learned what to do.
85% US + FM + RSU | 15% Cash
User avatar
nisiprius
Advisory Board
Posts: 46543
Joined: Thu Jul 26, 2007 9:33 am
Location: The terrestrial, globular, planetary hunk of matter, flattened at the poles, is my abode.--O. Henry

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

Post by nisiprius »

I repeated the same exercise I did before--equalizing risk--only this time I used RYOCX instead of QQQ, because of Kbg's comments.

Well, I made one other change. Since Warren Buffett actually said "a very low-cost S&P 500 index fund. (I suggest Vanguard’s)," I used VFINX (rather than SPY) to represent the the 90% allocation in the Buffett portfolio.

I got the same result: over the time period Mar 1994 - Apr 2022, if you were not willing to take more risk than Warren Buffett, there would have been no advantage to using RYOCX instead of an S&P 500 index fund. When portfolios are adjusted to match risk, using RYOCX would have resulted in a lower return than using an S&P 500 fund.

My premise is that we do not wish to exceed the risk level Warren Buffett specified for his wife's portfolio. That is, we do not wish to exceed the risk of 90/10 where 90% is VFINX and 10% is Treasury bills (PortfolioVisualizer's "CASHX.")

The first portfolio is Warren Buffett's portfolio: 90% VFINX and 10% Treasury bills.

In the second and third, we substitute RYOCX for the stock exposure, and we adjust the asset allocation so that the portfolio risk does not exceed that of 90% VFINX. For the second portfolio, we match the short-term volatility as measured by standard deviation; this required cutting the RYOCX allocation to 55.4%. For the third, we matched the maximum drawdown, which required cutting the RYOCX allocation to 44.25%

Source

Image
Kbg wrote: Sat May 14, 2022 6:54 pm...However, when killing time on an investment board I like to poke at folks who ignore some data to make a point. Of course I’m talking reward mainly and the response is oriented to risk vs reward. Using my suggestion pv’s +2.51 CAGR for a -.05 sharpe is a preference...
I have not mentioned the Sharpe or Sortino ratios anywhere above in this posting. I showed that if you do not take more risk than Warren Buffett wants his trustees to take, you end up with a smaller number of dollars. Apples to apples, dollars to dollars.

You have to take risk into account somehow, otherwise all comparisons put a thumb on the scales on the side with more risk. How to define or measure risk has an element of subjectivity to it.
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.
Kbg
Posts: 219
Joined: Thu Mar 23, 2017 11:33 am

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

Post by Kbg »

Marseille07 wrote: Sat May 14, 2022 7:32 pm
Kbg wrote: Sat May 14, 2022 6:54 pm My “ya but” is if we are going to focus on “the worst” then the worst for broad market was -90% over a very similar time period in length.

Everyone should invest where and how they feel comfortable and that’s really the bottom line for all of us.

However, when killing time on an investment board I like to poke at folks who ignore some data to make a point. Of course I’m talking reward mainly and the response is oriented to risk vs reward. Using my suggestion pv’s +2.51 CAGR for a -.05 sharpe is a preference. :sharebeer
I sort of assume away 1929; my hope is that the Fed has learned what to do.
And I sorta assume the Nasdaq won’t have a P/E ratio of 90 again. :greedy 😂

Nisipris…point conceded on risk back aways…wonder what happens if you keep the 10% fixed and redeploy the freed up cash? Pretty sure we are going to beat uncle Warren with better risk metrics if we do it right. Let’s start with small cap value.
Northern Flicker
Posts: 10434
Joined: Fri Apr 10, 2015 12:29 am

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

Post by Northern Flicker »

Kbg wrote: Sat May 14, 2022 7:03 pm I like what Meb Faber says…anything other than a total global portfolio is an active bet. Qqq is no more active than spy. It IS a narrower index based on where a stock is listed. The fact is both have been and are currently largely driven by the tech sector.
Total Market VTI 25.15% Tech
S&P500 VOO 25.59% Tech
Nasdaq QQQ 48.17% Tech
My postings are my opinion, and never should be construed as a recommendation to buy, sell, or hold any particular investment.
Kbg
Posts: 219
Joined: Thu Mar 23, 2017 11:33 am

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

Post by Kbg »

More like 40+ in actuality for the S&P 500 and 55+ for the N1.

The above assumes comms services and some of healthcare is “tech.”

For sure reasonable folks can differ and I wouldn’t argue with someone defining tech as just the official sector so I won’t. But I would say it’s not too contentious to assert tech has been the main driver of the market for quite a while.

And it gets weird with companies like Apple and Amazon
User avatar
hiddenpower
Posts: 159
Joined: Wed Nov 18, 2020 12:24 am

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

Post by hiddenpower »

It amazes me how SCV is okay but nasdaq isn't. I bought a slug of QQQM last week. I would call the year 2000 an anomaly for this fund.
bighatnohorse
Posts: 408
Joined: Thu Oct 13, 2016 4:04 pm

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

Post by bighatnohorse »

.
.
It's not a portfolio strategy.
In a 2013 letter to Berkshire Hathaway shareholders, Warren Buffett noted an investment plan for his wife that seemed to contradict what many experts suggest for retirees.
He wrote that after he passes, the trustee of his wife's inheritance has been told to put 90% of her money into a stock index fund and 10% into short-term government bonds.
Marseille07
Posts: 9241
Joined: Fri Nov 06, 2020 1:41 pm

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

Post by Marseille07 »

hiddenpower wrote: Mon May 16, 2022 10:09 am It amazes me how SCV is okay but nasdaq isn't. I bought a slug of QQQM last week. I would call the year 2000 an anomaly for this fund.
I do not recommend factor / sector plays. It's unfortunate this Buffett QQQ modification receives more attention than the original Buffett portfolio.
85% US + FM + RSU | 15% Cash
User avatar
hiddenpower
Posts: 159
Joined: Wed Nov 18, 2020 12:24 am

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

Post by hiddenpower »

Marseille07 wrote: Mon May 16, 2022 10:29 am
hiddenpower wrote: Mon May 16, 2022 10:09 am It amazes me how SCV is okay but nasdaq isn't. I bought a slug of QQQM last week. I would call the year 2000 an anomaly for this fund.
I do not recommend factor / sector plays. It's unfortunate this Buffett QQQ modification receives more attention than the original Buffett portfolio.
Yes, I'd call QQQ a sector tilt towards tech (although I think the "market" will be swallowed by tech). I got on the phone with an advisor at goldman sachs, and got a clear thumbs up for using the nasdaq as a core holding, and he even referred to it as a broad based index. That surprised me. Now could things change over 30 years? Sure but I would plan to reevaluate in 10 years.
Marseille07
Posts: 9241
Joined: Fri Nov 06, 2020 1:41 pm

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

Post by Marseille07 »

hiddenpower wrote: Mon May 16, 2022 10:45 am Yes, I'd call QQQ a sector tilt towards tech (although I think the "market" will be swallowed by tech). I got on the phone with an advisor at goldman sachs, and got a clear thumbs up for using the nasdaq as a core holding, and he even referred to it as a broad based index. That surprised me. Now could things change over 30 years? Sure but I would plan to reevaluate in 10 years.
Which instruments? QQQM is not the NASDAQ. You can add QQQJ maybe, but they only cover the biggest 200 iiuc.
85% US + FM + RSU | 15% Cash
User avatar
hiddenpower
Posts: 159
Joined: Wed Nov 18, 2020 12:24 am

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

Post by hiddenpower »

Marseille07 wrote: Mon May 16, 2022 10:50 am
hiddenpower wrote: Mon May 16, 2022 10:45 am Yes, I'd call QQQ a sector tilt towards tech (although I think the "market" will be swallowed by tech). I got on the phone with an advisor at goldman sachs, and got a clear thumbs up for using the nasdaq as a core holding, and he even referred to it as a broad based index. That surprised me. Now could things change over 30 years? Sure but I would plan to reevaluate in 10 years.
Which instruments? QQQM is not the NASDAQ. You can add QQQJ maybe, but they only cover the biggest 200 iiuc.
Nasdaq-100*. QQQM is considered a broad based index even by your broker (lower margin requirements, another reason to prefer it over VGT, and the fact you can perfectly hedge with /NQ). You can invest in nasdaq-composite (ONEQ), but I wouldn't, way too many SPACS and IPO cashgrabs over the years. Small cap growth is tainted from my perspective.
Marseille07
Posts: 9241
Joined: Fri Nov 06, 2020 1:41 pm

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

Post by Marseille07 »

hiddenpower wrote: Mon May 16, 2022 11:00 am Nasdaq-100*. QQQM is considered a broad based index even by your broker (lower margin requirements, another reason to prefer it over VGT, and the fact you can perfectly hedge with /NQ). You can invest in nasdaq-composite (ONEQ), but I wouldn't, way too many SPACS and IPO cashgrabs over the years. Small cap growth is tainted from my perspective.
Well I don't care what my broker considers, we all have to do our own due diligence here.

https://www.portfoliovisualizer.com/bac ... ion2_2=100

QQQ and ONEQ perform differently in my opinion, the difference is bigger than S&P vs US TSM.
85% US + FM + RSU | 15% Cash
Kbg
Posts: 219
Joined: Thu Mar 23, 2017 11:33 am

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

Post by Kbg »

At least according to performance a little selectivity in an index can be helpful.

QQQ vs QNEQ just posted. Another is the Russell 2000 vs S&P Smallcap 600.

In PV: IJR beats IWM in every metric

On another board several years ago in comparing the two someone wrote about the S&P version as being a basic "crap filter"
secondopinion
Posts: 2909
Joined: Wed Dec 02, 2020 1:18 pm

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

Post by secondopinion »

Kbg wrote: Mon May 16, 2022 2:42 pm At least according to performance a little selectivity in an index can be helpful.

QQQ vs QNEQ just posted. Another is the Russell 2000 vs S&P Smallcap 600.

In PV: IJR beats IWM in every metric

On another board several years ago in comparing the two someone wrote about the S&P version as being a basic "[crud] filter"
Not only that, but even the value/growth tilts are good for the S&P 600: https://www.portfoliovisualizer.com/bac ... ion3_3=100

I am getting more and more convinced in the S&P as a whole as a good way to do a tilt passively.
Passive investing: not about making big bucks but making profits. Active investing: not about beating the market but meeting goals. Speculation: not about timing the market but taking profitable risks.
Post Reply