I know a lot of people are considering Google, but I was thinking of QQQE with a 10 year horizon.
Thoughts?
-Rubic
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I know a lot of people are considering Google, but I was thinking of QQQE with a 10 year horizon.
Both?
They’re different types of investments–
QQQE is more of a sure thing, with just moderate uncertainty about how much you’ll make.
After crunching a zillion numbers, I estimate that it “ought” to be trading around $59-64 these days.
Since pretty much everything is more expensive than it used to be in decades past, and the price is about $65 which is pretty close to that range, in theory that counts as “fairly priced”.
Of course, crunching a zillion numbers doesn’t mean I’m right, but it’s a well informed hunch.
The basic reasoning goes like this:
The real earnings of that group have historically trended very well, rising about inflation + 8%/year for ages, plus you get about 0.5%/year dividends.
And the current multiple seems to be pretty close to the trend line. (today’s point on the trend line of real earnings, times historically average multiple of that line)
So, within substantial rounding error, a buyer today might expect something in the vicinity of that: inflation + 8.5%.
The real world is always worse than you expect when crunching numbers, so knock off a couple of percent per year in your expectation.
If you get the full forecast level, consider it a windfall.
Downsides: 4% of 100 holdings are Chinese VIEs. And one is Facebook ; )
Upside: it can’t go broke. And it’s not too hard to get a yardstick of value.
For Alphabet, the central expected return is probably higher, but the certainty is VASTLY lower.
Many people agree it’s a great and very resilient business, but the expectations for any one company can always be wrong.
Stuff happens, sometimes.
I bought a fair bit of GOOGL lately, and no QQQE, but I’m more of a single-stock kind of fellow.
Jim
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My limit buy order for QQQE hit during the Friday meltdown. So I think it is a good idea for a multiyear hold.
Sell cash secured puts? With underlying currently at $65, here are two options
(1)
Dec 16 2022 ATM puts at strike 65 have 5.60 bid 6.10 ask
If got the bid then return could be 5.60/(65-5.60)*365/207= 0.166 or 16.6%
If got assigned you get the underlying at less than $60
(2)
Dec 16 2022 10% OTM (roughly) puts at strike 60 have 3.60 bid 4.40 ask
If got the bid then return could be 3.60/(65-3.60)*365/207= 0.10 or 10%
If assigned you get the underlying at about $61.40
(3) can get higher effective return if use shorter expiration date e.g. Sept 16 2022
There’s more chance of being assigned if the drop continues, but if contemplating being long at this price then getting assigned at a lower price isn’t bad, and if you’re not assigned you get a nice return.
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My limit buy order for QQQE hit during the Friday meltdown.
I have a stupid-low limit order for QQQE at 52. Don’t know if I am happy or sad that it hasn’t filled yet.
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I have a stupid-low limit order for QQQE at 52. Don’t know if I am happy or sad that it hasn’t filled yet.
Mungo’s major bottom detector hasn’t fired yet, so you probably get another bite at it.
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Looks like GOOGL is going to give up some ground based on SNAP’s after hours disclosure.