The Nasdaq 100 Technology index measures the performance of technology shares in the Nasdaq 100. It has been in a strong uptrend since 2009 with periodic interruptions. So far every interruption has been followed by a resumption of the uptrend.
The current position is that it has been bouncing around for some five months in what is clearly another interruption. The odds strongly favour an eventual resumption of the uptrend. I say this partly because that is what the chart looks like, partly because it is obvious that the technology revolution is unfolding at as rapid a rate as ever and partly because I can see from their quarterly reports that the many technology companies I follow continue to trade strongly. Where they don’t it is for stock specific reasons; not because of any slowing in the global digital transformation that is the phenomenon of the age.
In a nutshell, all the factors driving the long running bull market in technology shares remain in place. This in turn means that the central QV strategy stays the same. Buy high quality growth-oriented investments. Hold them through thick and thin. Add to your holdings on periodic buy signals.
I am agreeably surprised to see just how well this strategy is working with QV for ETFs. The average gain on all recommended ETFs in the portfolio is over 60pc? Believe me, that is an astonishing performance. Once reason is my enthusiasm for leveraged ETFs, which deliver outstanding gains in a rising market. I won’t be recommending any leveraged ETFs in this issue. I have written about them recently and will write about them again, as a group in future. My personal strategy is heavily focused on leveraged ETFs but regular ETFs also work very well and spare you the terrifying dips periodically associated with leveraged ETFs.
It is possible to interpret the latest movements in the Nasdaq 100 Technology index as a triangle. I don’t set huge store by this kind of pattern analysis but it is a fairly obvious uncertainty pattern. Technology shares have had a great run and valuations have looked over-extended. I say that now with the advantage of hindsight since valuations always look over-extended on shares in exciting companies until they report doubled or tripled profits. We needed a pause for breath and that is what is happening. How long will it last? Your guess is as good as mine but I see no reason to change my approach and triangles are categorised as continuation patterns so the eventual breakout is likely to be higher.
If it breaks down that is not the end of the world. We just need to wait for a different shaped pattern to form and that will probably eventually break higher with even more force. That is the beauty of a portfolio of well chosen shares/ ETFs. It is heads you win; tails you win.
Below are my latest choices. Where there seems to be duplication there is no need to buy both ETFs. They all look good for similar reasons so whatever you buy should do well. These are ETFs whose prices are being driven higher by what is happening in the world. They are riding powerful, long-running trends. Trends which I believe are still at an early stage. As managers of funds and individual technology companies keep saying – it is highly likely that the best is still to come. These are exciting times for investors but there is also great volatility. You need to be patient. Hold your nerve. Keep holding; keep buying.
IBB. iShares Nasdaq Biotechnology Buy @ $160.50. Times recommended: 1. First recommended: $ 140.50
HACK. Prime cyber security. Buy @ $60.2. Times recommended: 4 First recommended: $39.50. Last recommended: $48.50. Lowest recommended: $37.35
FNY First Trust Alphadex Mid-Cap Growth Buy @ $72.39. Times recommended: 2. First recommended: $46.35 Last recommended: $58
FNX. First Trust Mid Cap Core Alphadex Buy @ $100.68. Times recommended: 1. First recommended: : $76.86
SNSR. Global X Internet of Things Buy @ $35.50. Times recommended: 1. First recommended: $21.0
GURU. Global X Guru. Buy @ $47.94. Times recommended: 1. First recommended: $ 41.50
BOTZ. Global X Robotics & Artificial Intelligence. Buy @ $34.60. Times recommended: 1. First recommended: $31
PBS. Invesco Dynamic Media. Buy @ $53.88. Times recommended: 1. First recommended: $40.70
IYW. Shares US Technology. Buy @ $94.30. Times recommended: 5. First recommended: $44.51. Last recommended: $74.75
IGV. IShares Expanded Tech Software. Buy @ $364. Times recommended: 9. First recommended: $191.50. Last recommended: $382.50. Lowest recommended: $188.57
IETC. Shares Evolved US Technology. Buy @ $52.10. Times recommended: 2. First recommended: $37.54 Last recommended: $41.25
IWV. Shares Russell 3000. Buy @ $251.75. Times recommended: 6 First recommended: $150.14. Last recommended: $237.50
IJT IShares Small Cap 600 Growth. Buy @ $131.29. Times recommended: 1. First recommended: $92.31
ISPY L&G Cyber Security Buy @ Eur20.75. Times recommended: 3. First recommended: Eur14.99. Last recommended: Eur20.77
LUXE EMLES Luxury Goods. Buy @ $31.06. New entry
JPSE. JP US Small Cap Buy @ $44.75 Times recommended: 2. Fist recommended: $31.9. Last recommended: $31.98
JRS. JP Morgan Russian Securities. Buy @ $730. New entry
PTH. Invesco Healthcare Momentum. Buy @ $164. Times recommended: 5. First recommended: $85.66. Last recommended: $147
XSMO. Invesco S&P Small Cap Momentum. Buy @ $54.21. Times recommended: 6. First recommended: $38.10. Last recommended: $43.77. Lowest recommended: $31.27
XME. S&P Metals & Mining. Buy @ $46.72. New entry
XHS. S&P Health Care Services. Buy @ $114.50. Tims recommended: @. First recommended: $71. Last recommended: $88.5
SLYG. S&P 600 Small Cap Growth. Buy @ $87.75. Times recommended: 4. First recommended: $61.40. Last recommended: $68.50. Lowest recommended: $49.65
XLV. Healthcare. Buy @ $125. New entry
SPY S&P 500 $423. Times recommended: 5. First recommended: $283.34 Last recommended: $394.50
XLC. Communication services. Buy @ $79.45. Times recommended: 1. First recommended: $76
SMH Vector semiconductor. Buy @ $249.50. Times recommended: 1. First recommended: $198
When I launched QV for ETFs in the summer of 2017 I had no idea how it was going to work. The results have been extraordinary. The gain on ALL recommendations is 62.5pc and the vast majority of alerts are in profit. There is a strong case for basing an entire investment strategy on ETFs perhaps with a leavening of high conviction holdings in individual shares. I find shares in individual companies more fun because it is easier to get excited about the story and individuals involved. Nevertheless, in the face of these results, I am stepping up my exposure to ETFs.
Part of the reason for the exceptional performance is my aggressive approach to recommending leveraged ETFs. At some point it will make sense to break these down into two groups and monitor the performance of the unleveraged and the leveraged ETFs separately.
The problem with leveraged ETFs is their dramatic response to sell-offs. You may suddenly find your leveraged ETFs, as a group, have halved in valued. Many people would find this too stressful so will only want leveraged ETFs, like the equally volatile cryptocurrencies, to be a small part of their overall portfolio.
Unleveraged ETFs don’t behave in this frantic way. Instead they capture the underlying secular uptrend that is driving many technology-focused sectors of the stock market, especially on US markets, relentlessly higher. The ETFs featured above are part of that trend and eminently suitable for all investors including widows and orphans.