To The Moon

🌟🌟🌟The Magnificent 7 led the markets in 2023 but in 2024, 3 of the Magnificent 7 are in the red while 1 member of this group's returns puts it head and shoulders above its peers.

You may have known who they are.  Apple, Microsoft, Nvidia, Tesla, Meta Platforms, Google and Amazon each outgained the S&P500 in 2023 but this year Apple, Google and Tesla are in the red.  Nvidia is the Bright Star of the Magnificent 7 with breathtaking returns.   In contrast $Tesla Motors(TSLA)$  is down 28% year todate and is no longer in the Top 10 of the S&P500. 

Should I buy  Low or Chase High?   Or even do both? 

This implies that I know how to successfully time the market.  But timing the market is extremely difficult to consistently pull it off, unless I have a crystal ball. 

The problem is there is no real way of knowing ahead of time if a share is going to go up or down.  This means that when I buy low, I am actually making an educated guess.  I am saying that I think an investment is going to be worth more in the future. 

What about Chasing High?   Take for example Nvidia.  It seems like almost every day it is going up and continue to break new records.  Today Nvidia is up 4.4% and in past 5 days, it has jumped 15.7%.  Nvidia is now up a massive 92% year todate!  In the past year, Nvidia is now up 283%.

If I have a crystal ball, I would be buying Nvidia at USD 222.97, the lowest point in 2023 and be rejoicing when it hit its all time high today at USD 926.69 today. 

Not even the experts can be that good in predicting that Nvidia would go up like a rocket to the moon! 

I believe buying low and chasing high would not be the way if I want to have a portfolio that would grow over time since I can't predict the future. 

A better way for me is to dollar cost average quality stocks like the Magnificent 7.  This can result in some of the advantages of "Buy low or Chase High" without the guesswork and analysis.  Tiger Brokers have a great tool called Auto Invest that would allow me to slowly build my portfolio over time. 

I also believe in Diversification and have a long term time horizon.  Diversification helps balance out an investment portfolio because if some industries or markets are underperforming, other investments or markets could be outperforming.   This means a well balanced, diversified portfolio can help maintain growth even if certain investments are in a slump. 

The best way for me personally is to buy plain vanilla ETFs.    My favourite ETF is $SPDR Portfolio S&P 500 ETF(SPLG)$ This is a mini version of $SPDR S&P 500 ETF Trust(SPY)$  as both these ETFs track the S&P500 Index.  The Top 10 holdings include 6 of the Magnificent 7 plus Berkshire Hathaway, Eli Lilly and Broadcom.  Tesla has dropped to Number 11.

The Top 10 holdings weightage is 32%.  Total number of holdings is 505.  

As a bonus I even get Super Micro Computer (SMCI) which will be joining the S&P500 universe of stocks.  SMCI has seen a significant rise over the last 2 months - up over 300% in 2024 alone and nearly 1055% over the last year.    

Another note worthy stock is $Palantir Technologies Inc.(PLTR)$  which have been profitable for the last 5 consecutive quarters due to its role in AI.   Palantir is up 59% year todate and in the past year it is up 225%.

The expense ratio is the lowest among similar ETFs at only 0.02%.  Distributions are paid every quarter.  The next one is due on March 18.  The current distribution yield is 1.34%.

The beauty of SPLG is that it is represents the best and strongest US stocks in just 1 trade.  The companies should  be profitable for at least 4 quarters including the latest quarter.  The companies should have a market capitalisation of at least USD 8.2 billion, be highly liquid and have a public float of at least 50% of its shares outstanding. 

In other words stocks in the S&P500 are the best US stocks.  The S&P500 is rebalanced every quarter on the 3rd Friday of the quarter keeping only the best and weeding out the non performing stocks. 

So the hardwork of choosing the best stocks is done for me so that I can spend more time pursuing my hobbies and with my loved ones. 

So Buying Low, Chasing High are not something I would do.  I prefer to dollar cost average through Tiger Brokers Auto Invest and diversify my portfolio with plain vanilla ETFs.  Investing does not have to be complicated, just nice and simple. 

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