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Updates
August 24, 2023: are folks even paying attention? The "Qs" are in the news every day it seems, as the "end-all to be-all" it seems. But look at this, with a $50,000 investment in Invesco's QQQ, you have $6,000 in APPL and $44,000 in 98 other individual stocks, none of which by themselves will move the QQQ needle. Why not just put $10,000 in each of the top five each quarter and re-balance every quarter? Yes, on a quarterly basis, not a lot of diversification, but with quarterly re-balancing based on educated "guesses," the diversification improves over time.
August 24, 2023: again, the QQQ has approximately 100 individual equity holdings (see below). Look what an investor can do with an investment of $5,000 or $50,000 in the top ten holdings at the same percentages. On the other side, look at the trivial amount a $500 billion mutual fund would get if it sold all of its Nvidia at the end of the quarter to lock in profit so the manager would get. her bonus -- it would not even move the needle on the fund's return. One has to remember, the fund also bought this equity at some point in the past.
August 24, 2023: why in the world would a serious investor invest in an ETF? Take QQQ, as an example?
Like BRK, the top ten holdings in QQQ make up about 50% of total dollar value. The next 90 holdings make up the other 50% and not one of the next 90 holdings will ever move the needle for QQQ. And one pays a fee for an ETF. Why not simply start a new Schwab account (free, no fees, no minimu), "buy" the top ten holdings of any ETF one likes, and re-balance every quarter based on what the ETF is doing.
Original Post
I've never understood the fascination with ETFs. It seems to me, "real" investors could do better.
Example: Invesco QQQ.
Two data points that make me question the fascination of ETFs.
Total expense ratio: 0.20%.
Approximately one hundred holdings. Here are the top 52 before I got bored and quit tallying.
|
QQQ |
July 26, 2023 |
|
Apple |
11.62% |
|
MSFT |
9.95% |
|
AMZN |
5.05% |
|
Nvidia |
4.30% |
|
Meta |
3.48% |
|
Tesla |
3.21% |
|
Broadcom |
3.13% |
|
GOOG - A |
2.77% |
|
GOOG - B |
2.75% |
|
Pepsi |
2.16% |
|
Costco |
2.05% |
|
Adobe |
1.97% |
|
Cisco |
1.79% |
|
Netflix |
1.56% |
|
AMD |
1.49% |
|
Comcast |
1.47% |
|
T-Mobile |
1.40% |
|
Texas Instruuments |
1.38% |
|
INTC |
1.38% |
|
Honeywell |
1.14% |
|
QCOM |
1.40% |
|
Intuuit |
1.14% |
|
Amgen |
1.03% |
|
Starbucks |
0.97% |
|
Applied Materials |
0.96% |
|
Intuitiv Surgical |
0.95% |
|
Booking Holdings |
0.89% |
|
Mondelez |
0.83% |
|
Automatic Data Processing |
0.81% |
|
Analog Devices |
0.80% |
|
Gilead |
0.79% |
|
Vretex Pharm |
0.75% |
|
Lam Research |
0.71% |
|
PayPal |
0.67% |
|
Regeneron Pharm |
0.64% |
|
Palo Alto Networks |
0.61% |
|
Micron |
0.59% |
|
Synopsys |
0.57% |
|
CSX |
0.55% |
|
Cadence Design |
0.53% |
|
KLA |
0.53% |
|
Fortinet |
0.50% |
|
AirBnB |
0.50% |
|
Monster Beverage |
0.50% |
|
ASML |
0.49% |
|
Charter Comm |
0.49% |
|
Marriott |
0.49% |
|
MercadoLibre |
0.49% |
|
O’Reilly Auto |
0.48% |
|
NXP Semi |
0.47% |
|
Marvell Tech |
0.45% |
|
Cintas |
0.43% |
- do you expect to "make money" investing in QQQ?
- do you expect QQQ to do better than the NASDAQ as a whole?
- is there a NASDAQ ETF?
- if there is a NASDAQ ETF, has it historically done better or worse than the QQQ?
- could you invest without incurring any expenses? Any fees?
- can you think of a better way to invest in the NASDAQ?
*******************************
The Book Club
Edvard Muunch, Behind the Scream, Sue Prideaux, c. 2005.
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