Constant Reinvention Keeps US Stocks Buzzing

Back in the day, there was a biblical epic called ‘The Greatest Story Ever Told’. Maybe that is how we should describe the progress of the Nasdaq 100 since the index was created in January 1985.

We can see this even more vividly when each candlestick represents a year’s trading.

In 40 years of trading, stocks have only declined significantly five times. Three of those times came with the unwinding (bursting) of the Internet bubble, once with the financial crisis, and once when interest rates exploded in 2022. It takes a great deal of bad news to make the Nasdaq 100 go into reverse, and even when it does, it never stays there for long.

It took a double whammy, the bursting Internet bubble and the biggest financial crisis since 1929, to create the 12/ 13 years of consolidation between 2000 and 2012/ 13. We are back in a strong secular bull market, based firmly on the greatest revolution in human history, as accelerating technological change transforms everything, that looks set to run and run.

The lowest risk way to capitalise on this bull market is to buy shares in QQQ. Buy in a spread betting account with, say, two times leverage, and either hold forever or add to your holding at intervals. Over time, this should produce a great result, and if your holding becomes the repository of a large chunk of your savings, you can allow the leverage to fall over time to reduce risk further.

I’m sure I am teaching my grandmother to suck eggs. It is simple common sense.

Just holding QQQ can be lucrative but a tad boring. You can up the ante dramatically by having a parallel programme of $-cost averaging into a leveraged, daily rebalanced ETF like QQQ3.

You can also build a portfolio like my Top 20 stocks or whatever. The key is to invest in businesses that are rapidly becoming bigger because it is shares in those companies which appreciate the most. As usual, if you do all this in a spread betting account, all gains are tax-free.

One of the exciting things about many US businesses, especially those involved in technology, is that enormous research budgets mean they are in a constant state of reinvention. The day is coming when the combined spending on research and development of all the companies in the Nasdaq 100 will top $1 trillion. This is partly because of the constant devaluation of the dollar as the US government, like all Western governments, prints money to buy votes. Governments are like most of the rest of us; they can resist everything except temptation.

But it also reflects real progress as the technology revolution races on at an accelerating rate. Many people share my feeling that we are on the brink of an era of spectacular progress. Some may not be positive. The world seems to be gearing up for war, which can be loosely characterised as between East and West.

I suspect it will be a war like the co-opetition between large technology businesses, part rivalry and part co-operation. The US and China will constantly strive for advantage, but they need each other. In order to make sure that neither side takes too much advantage and lesser states are kept in their place, military spending and technology advances are likely to proceed apace.

This tendency is also driven by technological change. Countries which do not implement this in their military capabilities will be left behind, so an arms race is inevitable.

Technology will also change the way that companies operate. Fewer staff will achieve great things, but as the number of millionaires grows exponentially, almost everywhere except for Keir Starmer’s Britain, service industries and creativity will flourish, so there should be plenty for people to do.

I don’t see myself being put out of business by AI, even if it ends with me just signing my name at the bottom, and I don’t think that will happen. I am sure AI is amazing, but so is the human mind. I was going to add the male mind, but I realise that is outrageously provocative even for me and, no doubt, not true.

I like to write short stories. I have written one called The Domestication of Women. Unlike cows, horses, sheep, goats, barley, wheat, and much else, homo sapiens must have self-domesticated because there is nobody able to domesticate us.

It is outrageous even to suggest this, but women may be a grey area because they have been under the thumb of men for so long and still are in many societies. They have self-domesticated, but they may also have been domesticated by men and/or domesticated themselves to please men. This makes sense because the result is that they are the happier sex, experience fewer suicides, are more chatty, live longer, are more fulfilled, and so on. I have never met a woman who seriously wants to be a man, but I have met men who want to be women and dress accordingly.

I am now considering a new short story called The Geisha Principle. The idea is that deep down, not all but many, even most women, want to be sirens, irresistibly attractive to men and able to control their behaviour. Men will do anything to have their wicked way with an attractive woman (and attractive is not all about looks), which gives women enormous power. I imagine it is also great fun watching that dopey look on a man’s face as he falls in love with you.

Women need men for many things, and to compete with other women, they need to attract to get them. Men, throughout history, mostly just take. Geishas are the ultimate expression of women trained all their lives to serve and be alluring to men. Successful geishas in the geisha era were important people who would only bestow their favours on important men.

Women also have a caring side, perhaps because of domestication or because they are the ones who have children, and this caring can extend to their husbands as well as their children. Even when the man feels that he is the boss, the woman may feel that she carries responsibility for the harmony of her little group and will fight furiously to defend them all. In a nutshell, women are the heart of the family, but part of the fun is wrapping guys around their little fingers.

The flip side is that men do most of the serious stuff. They go out into the world while the ladies forage and nurture back home. This has been the way of it seemingly since the dawn of civilisation. Who knows what the deal was in the days of hunter-gatherers? But now we are in a new era of educated women, who can choose whether or not to become pregnant and are demonstrating greater equality with men in countless fields. This is new territory, like the technology revolution and may even mean that women are evolving into something more ferocious. That certainly appears to be what has happened with my daughters.

It may be that the reason for the incredible progress of Western society since the Second World War is that liberated women have doubled the workforce, giving a huge boost to creativity and productivity. When I look at successful US companies, there are many women working at all levels of the business, and there is little doubt that this is having a positive impact.

Many important companies are run by female CEOs. There are around 100 female billionaires in the US out of a total of 868 billionaires, which is a dramatic change from earlier times. This is yet another reason for feeling bullish about US stocks. Women entering the workforce triggered sustained, accelerated growth. Now we have robots coming in potentially unlimited numbers and becoming smarter every year. What impact is that going to have?

Tokenisation could be a big deal for Robinhood

I have been checking out the two guys who founded Robinhood. They are an impressive pair, Vlad Tenev and Baiju Bharat. They even look alike with shoulder-length black hair, kind of the way I imagine Vlad the Impaler might have looked. They are supergeeks who understand things like Blockchain, and they plan to use tokenisation to change the way that financial markets operate.

Tokenization is a data security process that replaces sensitive data with unique, non-sensitive identifiers called tokens. These tokens have no inherent value or meaning, and are used in place of the original sensitive data for various operations, like processing payments or storing data. This helps protect sensitive information from unauthorized access, as the tokens themselves cannot be used to retrieve the original data. 

AI Overview

One of their ideas is to use tokenisation to help retail investors buy shares in exciting private companies like OpenAI and SpaceX.

We believe that it’s actually quite crazy that customers can’t invest in private companies, given that private companies — companies are staying private longer. The days of Microsoft going public at a multi-hundred million market cap, or Apple at relatively low market caps, and you being able to take advantage of a lot of the appreciation in public markets, they are fewer and far between.

Now you have companies like OpenAI and SpaceX still private and in valuations of hundreds of billions. So those gains are accruing to a smaller and smaller group of insiders. We have the technology to do this. And in fact, I wrote in an op-ed for the Washington Post that tokenizing private equities is a huge unlock both for individuals, but also for these companies, and for crypto technology, which can actually solve a lot of the problems in secondary market transactions that have been tried thus far.

What’s needed is comprehensive security legislation in the U.S. and also for us to rethink the accredited investor rules, which shut out north of 80% of the public currently. So both of those, we’re making progress on. We’re in active discussions. There’s definitely a willingness from the administration and lawmakers to engage in these issues. So stay tuned, but we believe we’re going to make progress here.

Vlad Tenev, CEO and co-founder, Robinhood, Q1 2025, 30 April 2025

Robinhood is changing fast, and that drives shareholder value.

Unlike where the business was back in 2022, where we were predominantly focused on novice investors, the new focus on being the best platform for active traders, has made us more resilient in times like these because we used not have a lot of mechanisms for customers that were more sophisticated that wanted to trade sideways or declining markets. They just couldn’t engage in that super easily on Robinhood.

But just recently, we’ve launched futures. And as we shared, futures had a very, very significant growth in April with over 4.5 million contracts traded, outright contracts. We’ve rolled out an amazing experience for multi-leg options trading on mobile, the side-by-side chain, which will make it easier for advanced traders to engage in the multi-leg strategies. And Robinhood Legend continues to grow and get better.

So now we have multiple mechanisms for these active traders to engage no matter what the market environment is in. So even though we’re diversifying the business with nine business lines of over $100 million, and we’re getting less reliant upon trading in the revenue mix, even within trading, it’s becoming more resilient. So I think we’re very excited about that, and there’s still more to come.

Vlad Tenev, CEO and co-founder, Robinhood, Q1 2025, 30 April 2025

The direction of travel and ambition of Robinhood is incredible.

You can see this kind of in our overall business, as we’re growing revenue much, much faster than our bottom line costs. So, we’re seeing really nice leverage and 100% increase year-over-year in earnings per share. So, we feel really good about just continuing to stay focused on the customer, our three priorities of number one in active traders, number one in wallet share for the next generation and number one in global financial ecosystem. And we think if we stay focused on the customer and keep our primary financial lens on growth of earnings per share, we’re heading in the right direction.

Vlad Tenev, CEO and co-founder, Robinhood, Q1 2025, 30 April 2025

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