Any advice

Let’s assume I held it the entire time:

https://www.morningstar.com/etfs/arcx/qld/performance

If I had purchase QLD on 1/1/2008 and held it through today, $10,000 would have grown to $275,000.

By contrast, if I had purchased the NASDAQ 100, it would have grown to $76,000.

Next?

(warning: Cherry picking ahead)

And had you bought just 2 months earlier, You would have 30% less - $189,000. An impressive profit to be sure, but substantially less.

And how about the journey?

About 16 months after that purchase:
QQQ = $4,700
QLD = $1,700

I guess everyone’s barfing down here, but some more than others, yes?

About 38 months after that purchase:
QQQ = $10,000 (breakeven)
QLD = $7,000

About 53 months after that purchase:
QQQ = $12,500
QLD = $10,000 (breakeven)

It took just over 5 years for QLD to match & overtake QQQ at $16,000.


My takeaways are:

  • Entry point matters bigly
  • Know how well you can stomach volatility
  • It helps to have time on your side
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Like Hawkin said the best time to buy is when the Nasdaq has had a big drop (20 percent or more) like it just did recently.

Andy

“I’m sorry I missed Renaissance Technologies flagship Medallion Fund. A $100 investment in 1988 was worth almost $400 million by 2018.”

That is staggering !
Never a negative return year, kind of sounds like that Bernie guy, lol.

If our government wasn’t bought and paid for by the .1%ers, adding a penny or a nickel
tax onto every high frequency trader transaction could bring in some revenue. They could add
that tax to every trade, even small time chumps like me, wouldn’t bother me at all.
As they say in the mafia movies, one crook to another, let the government
“wet their beak”, a small tribute that is the cost of doing business.

Answering 2 replies with 1 post…

…but keeping up with the S&P 500 is one of the best ways to retain your buying power and keep up with inflation.

Or buy individual stocks that grow their dividends faster than inflation. My current portfolio has an average of 8% dividend growth. Up until this year was way ahead of inflation.

If you wish to reduce volatility, lower your equity allocation.

Or you could be low beta stocks, those that have less volatility than the index. Usually utilities and the like. I haven’t calculated the beta of my portfolio but rarely do I by things with significant volatility.

JLC

If you pick a good company, you can do it with one. Pretty easily. I own COST. I just ran the comparison. At 5 years COST is slaughtering the S&P. If I do “max”, it’s even more dramatic.

https://www.google.com/search?q=cost%20vs%20S%26P500#wptab=s…

It’s not a barn-burner, rocket to the moon. It’s just a juggernaut. Pretty consistently beating market year after year. After a while, it becomes a very substantial beat. It’s not sexy. It doesn’t match some investors’ returns (e.g TMF’s Saul). But quality wins out.

(Apologies that this link doesn’t go to the comparison, it just goes to the S&P…but you can enter “COST”, and select “5 yr”, and see for yourself.)

I’ve owned COST for at least a decade now. I’m not advising a strategy of putting all your money in one stock (I don’t do that either). Just making the point that identifying a quality company and letting it ride will outperform most fund managers most of the time.

In fact, it was after I read a Peter Lynch book that I bought COST. Lynch said that you should visit the business if you can. Well, I was a Costco member. So I paid attention to the business instead of my shopping list for one visit. The parking lot was jammed. It was a huge lot, and people were cruising trying to grab a space as others were leaving. The oversized carts of the shoppers leaving the store were overflowing. The huge warehouse was jammed with carts as people picked up everything from big screens to toilet paper. All the registers were open, and there were lines four or five deep on every one of them. So I looked up their 10K and 10Q, saw the numbers, and bought stock.

So that is my advice. Look at the business. Look at the numbers. Don’t let short-terms swings scare you. Don’t try to hit a home run. Invest in quality, and 20 years later you’ll be happy you did. Not necessarily COST. That’s just my example of what I did. I can’t know what the future holds for COST, but so far their numbers have not moved me to sell a single share. I’m sure there are many more companies out there like that. If I were a coffee drinker I probably would have gotten into SBUX when my broker recommended** it (back in '94, I think). But I wasn’t, so I never really “saw” the traffic at the stores, and never bothered beyond that. I’d be up A LOT if I had bought in '94.

And, no, that advice isn’t original. I got that from guys like Peter Lynch.

1poorguy (now “dabbles” in some more speculative stuff, and has a portion of his portfolio in “Saul stocks”; but most of his port is still in boring quality)

**The broker my company used for ESPP had a habit of sending out messages with some “analysis” recommending companies. I didn’t have a person that was “my broker”, it was just the brokerage house my company used. I later opened up my own brokerage account at a discount broker, and only used the other account for ESPP (since I had no choice in that).

1 Like

Or buy individual stocks that grow their dividends faster than inflation. My current portfolio has an average of 8% dividend growth. Up until this year was way ahead of inflation.

That’s great. What are some good stocks that will be increasing the dividend greater than inflation over the next 10 years? Without excessive risk that the company will implode. Let me see…it’s 1980 and General Motors looks good. So does Lucent Technologies. IBM is always solid. And Lehman Brothers is a “rock” in the financial world. And don’t forget Westinghouse (“you can be sure if it’s Westinghouse”) and General Electric. I’ll just load up on today’s equivalent of those and live off the dividends for the rest of my life!

3 Likes

If you pick a good company, you can do it with one. Pretty easily.

Sounds easy! It’s 1985 and AT&T is breaking up. I think I’ll buy Lucent Technologies, because people are going to be buying phones and phone systems big time! I’m set for life now!

Obviously you have to watch the numbers. Think I mentioned that…

For your example, I got pricing in the 90s. So…if you had Lucent in 1996 at $45, you could have sold it in early 1999 for $110. I didn’t follow Lucent, and don’t know what turmoil was going on. If I owned the stock, I would have.

For COST, I follow the company. So far, the numbers are good. If that changes, I would sell.

Unless your point is that an individual stock is not “buy and forget”. You can do that with an index, but it is extremely hazardous for an individual stock. The point I was addressing is that it is pretty easy to beat the market. Maybe not like Saul, but you can beat it by a several percent just choosing (and watching!!) a few quality companies.

And I added the caveat that I wouldn’t recommend owning one stock, nor do I do it.

Sounds easy! It’s 1985 and AT&T is breaking up. I think I’ll buy Lucent Technologies, because people are going to be buying phones and phone systems big time! I’m set for life now!

The parameter was to pick a good company. Lucent was losing marketshare to Northern Telecom because the technology was going from analog to digital.

Andy

Don’t forget that this thread started with OP saying “I am 13.5% down. For me this is huge.”

Clearly we are off on a tangent. The OP wasn’t focused on beating the market.

I don’t think it’s a tangent at all–OP wanted some suggestions, and is clearly rattled by losing 13.5%, so it’s probably not going to be a good substitute to have a higher-possible-upside alternative that has a much higher possible downside that requires one to hold onto or lose big. Or if it’s a tangent, it’s one that the board would be interested in.

How long have you been beating the market in leveraged funds?

Good question. At least 9 years off and on. I don’t have access to statements older than the last seven years but it would not surprise me if it dates back to 2009 or 2010. I changed jobs in October of 2008 and rolled a 401k to an IRA. That was the first time I had enough cash that I felt it made since to start picking my own stocks - and that included index investing.

I checked UPRO to see what its loss was 12/2/2007 to 3/1/2009, and it didn’t show up in yahoo.finance.com in that time period, so maybe it wasn’t available. Same with TQQQ. They both appear to start in 2009/2010. QLD lost 80.53% in that time '07 - '09 period. Yikes!

What are some good stock…I’ll just load up on today’s equivalent of those and live off the dividends for the rest of my life!

Just like anything in investing, nothing is 100% but there are ways to stack the odds in your favor.

Start with the list of dividend champions (companies that have increased their dividends yearly for 25 years or more). These companies have been through several business cycles, good and bad, and have probably changed business plans more than once.

https://www.dripinvesting.org/tools/tools.asp

Then you can look at see what the dividend growth rate has been over the past 5 years. That will give you some idea how the company is increasing payments. Some like to use what is called the “Chowder Number” which is adding the current yield and the 5 year growth rate, most that I have read like that to be 10 or higher.

None of this is a guarantee, but spread out over 20 stocks, I like my chances. It also doesn’t mean buy and forget. I’ve been doing it this way for some time.

JLC

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