We can invest in the shares that make up the Nasdaq 100 by acquiring a position in QQQ portfolio.
Knowing the QQQ portfolio in depth can change the way you follow stock markets and manage your investments.
Until the late 1980s, those who observed variations in the Dow Jones index to know what was happening on Wall Street still dominated .
Since then, the S&P 500 index has started to reign as a market measure.
It is still used to synthesize the global movement, and the main ETF that emulates it, SPY, is the most popular.
But every day more investors choose the Nasdaq 100 as the reference, as its portfolio is made up of the companies that lead the economy of our time.
It has an excellent relationship between yields and risks for more than ten years.
Since the monetary policy relaxation that began in the 2008 crisis, QQQ has clearly dominated yields against SPY (S&P 500) and DIA (Dow Jones).
These are the main shares of QQQ, and represent 60% of the portfolio:
What is QQQ ?
QQQ is a kind of investment fund (ETF) that is listed on Wall Street and can be traded minute by minute as if it were a stock.
It has very high liquidity and an active options market, vital to be able to measure your risk levels and organize your investment strategies.
As we can see on the cover of its issuance prospect, this EFT created by INVESCO aims to emulate the yields of the Nasdaq 100 index, and has in its portfolio all the shares that make up that index.
Just as the Nasdaq 100 is just a mathematical calculation, QQQ is a real stock portfolio.
Quarterly pays dividends.
Its yields have historically been very similar to the index, and that’s why it has become the most popular ETF for investors who want to replicate the Nasdaq 100.
What advantages does QQQ have as an investment portfolio ?
QQQ can help you design your investment policy these days, accessing Wall Street’s most dynamic portfolio through a single asset.
The following key concepts in Finance are familiar and relevant to all:
Risk measurement and control
A well-diversified portfolio protects us from so-called «non-systematic risks», those affecting a particular company or sector.
How do we know it’s a well-diversified portfolio?
Because we have a tool to measure QQQ risk minute by minute: the expected volatility of the Nasdaq 100, called VXN.
Also QQQ allows us to manage and control our risks as it has an excellent options market.
In the face of each market situation, it is very difficult to make buy or sell decisions.
There are always reasons to make one or the other decision.
Trading options allows us to make «small» decisions that can generate «big» changes in the performance of our portfolio.
Finally, let’s look at its adaptation to the principle of market efficiency.
In a market as liquid and universally analyzed as the QQQ portfolio, we can be confident that the market price reasonably reflects each company’s valuation with the information available at all times.
Unlike the other indices, on the Nasdaq 100, the weight of each stock in the portfolio is not determined by any Committee of Experts, but by the decisions made by investors acting on the Market every day.
How to invest in QQQ ?
There are many ways to use this portfolio in your investment policy.
On this site we present you a passive investment approach, with strategies adapted to price variations and market risks.
Analyzing this approach can be helpful for either adopting a similar one, or generating your own investment policy.
What is passive investment?
To acquire a position in QQQ and maintain it, always.
How do we act on price and risk changes?
Making very simple trades in the options market.
What criteria do we decide on operations?
Adopting defensive strategies against loss of yields and risk increases, and aggressive strategies in the opposite situation.
In addition, this policy has been reflected in investment algorithms, which generate decisions based on quantitative information, which allows us to free ourselves from the personal emotions or opinions of analysts in each market situation.
Once the investment policies have been defined, and from them a set of algorithms that we have called AL 100, we programed a backtesting, that is, an evaluation of the results that AL 100 would have generated in the past.
These were the results:
The yields achieved in 2019 and 2020 have exceeded our expectations. These were the yields («rendimientos») during 2020 & 2021 and considering the last 12 months ended on May 31, 2022:
You can drill down into these concepts in the following links: