10Mes
The question is basically justified. The long-term return of QQQ is almost twice as high as that of VT.
So what is the argument against QQQ? As has already been said, it is essentially the volatility. You have to be able to withstand 80% maxDD. It's certainly possible in a savings plan, but I don't know anyone who went through the 2001-2004 DD unscathed. QQQ only reached the 2001 level again in 2013, the return since 2001 is close to or below that of VT! You have to endure that! It is above all a psychological question. Perhaps it is precisely this aspect that generates QQQ's excess return?
Anyway: if you have time and nerves, QQQ is probably the best choice objectively. Also economically, because the greatest growth, the most innovation and the best economies of scale can be found in QQQQ. The mixed goods store VT can't hold a candle to that.
So what is the argument against QQQ? As has already been said, it is essentially the volatility. You have to be able to withstand 80% maxDD. It's certainly possible in a savings plan, but I don't know anyone who went through the 2001-2004 DD unscathed. QQQ only reached the 2001 level again in 2013, the return since 2001 is close to or below that of VT! You have to endure that! It is above all a psychological question. Perhaps it is precisely this aspect that generates QQQ's excess return?
Anyway: if you have time and nerves, QQQ is probably the best choice objectively. Also economically, because the greatest growth, the most innovation and the best economies of scale can be found in QQQQ. The mixed goods store VT can't hold a candle to that.
•
99
•
10Mes
@Epi the ATH of 2000 was almost only reached again after 18 years. This period is only 6 years for the msci world
•
11
•
10Mes
@Epi all valid arguments... but: you have to look at the big picture.
1. I think the .com bubble was a one-off effect (of course something similar could happen again, but there are exceptions) and also
2. everyone talks about the big crash of the .com bubble - but they forget that $NDX increased almost sevenfold between 1998 and 2000. That means two things again:
a. normally you would have taken profits that were higher than world and would still be up , even after -80% ( 1x7 - 7x80%) and
b. If an index like Nasdaq increases almost sevenfold in 2 years, the alarm bells should ring and at least a part should be sold/kept an eye on. At the latest when it goes downhill, you should take the step and sell.
But I realize that in hindsight everything seems simpler and easier said than done ... but I just want to say that objectively speaking, things are put into perspective
1. I think the .com bubble was a one-off effect (of course something similar could happen again, but there are exceptions) and also
2. everyone talks about the big crash of the .com bubble - but they forget that $NDX increased almost sevenfold between 1998 and 2000. That means two things again:
a. normally you would have taken profits that were higher than world and would still be up , even after -80% ( 1x7 - 7x80%) and
b. If an index like Nasdaq increases almost sevenfold in 2 years, the alarm bells should ring and at least a part should be sold/kept an eye on. At the latest when it goes downhill, you should take the step and sell.
But I realize that in hindsight everything seems simpler and easier said than done ... but I just want to say that objectively speaking, things are put into perspective
•
11
•10Mes
@Alexxela You are focusing your argument on the dotcom bubble.
You don't know whether something like that will happen again. Sometimes I see parallels to today: over 10x since the last low, this time a little longer, similar euphoria despite interest rate hikes this time AI, many new soldiers of fortune, this time via ETF. Etc.
The time period is always decisive when looking back. If you go back to just before a boom, the result is of course different to just after the boom. Objectively, as you say, there is nothing to it at first.
To work this out, there are certain key figures, e.g. max DD or time till recovery. If you apply these to the entire period of QQQ's existence and compare them with VT, the result is what I said above.
But basically I agree with you. With time and nerves, QQQ is the better alternative.
You don't know whether something like that will happen again. Sometimes I see parallels to today: over 10x since the last low, this time a little longer, similar euphoria despite interest rate hikes this time AI, many new soldiers of fortune, this time via ETF. Etc.
The time period is always decisive when looking back. If you go back to just before a boom, the result is of course different to just after the boom. Objectively, as you say, there is nothing to it at first.
To work this out, there are certain key figures, e.g. max DD or time till recovery. If you apply these to the entire period of QQQ's existence and compare them with VT, the result is what I said above.
But basically I agree with you. With time and nerves, QQQ is the better alternative.
••