I Just Shorted The NASDAQ

I have a confession to make. I consider myself a long-term investor but as I’m seeing meme stocks rally and unproven tech stocks like post guidance that’s 30% below expectations with mounting losses and rally, I have a really bad feeling about the market.

But I do believe I own a group of very high quality companies that are mostly undervalued (I’m watching you and .

So what are my options?

Well I could stand by the “long-term investing, never sell” rock which oh by the way is a marketing scheme for some very large investment services that have figured out the perfect way to appeal to millions of subscribers with very high churn, and huge marketing dollars.

Or I could be realistic and protect my portfolio with something like shorting the Nasdaq while holding my portfolio of mostly “tech” companies.

So that’s what I did. I bought a roughly 10% position in SQQQ which is a 3x leveraged inverse QQQ ETF.

Don’t blindly follow me into this trade… or into any trade. Make sure you understand what you’re getting yourself into and take some time to read the fund’s prospectus.

This is a short-term trade and I know how hard it is to time the market. I also know how much of a waste of time short-term trading usually is.

All of these reasons make it totally justifiable for most people to just DCA into stocks over the long run.

Just to give you an idea, here’s how the SQQQ has performed vs the QQQ over the last year. If you look at the top of the graph you see that from March 2022 - June 2022, the QQQ was down 22% and SQQQ was up 59%. But then if you look at the lower right of the graph you can see QQQ is down 16% and SQQQ is down 12%.Why? SQQQ is designed to be a short-term trading ETF. I don’t see myself holding it for longer than a month… and even that is probably way too long.

The bottom line is this. I’m trying to generate long-term wealth and my portfolio has had an incredible rebound over the last 6 months.

I’m not about to fall into the same trap I did through the first half of 2022 when there was too much excitement in the market given the reality of the macro situation.

So I’m hedging my long exposure a bit. If this makes you mad and makes you want to unsubscribe I will gladly give you a full refund. Just send me an email and let me know.

But if you appreciate the honesty and my willingness to change my mind when new information comes in, then consider starting a paid subscription. I don’t ever want to sell ads in this newsletter and every paid subscriber helps me keep doing this.

Here’s a look at the top 10 holdings of the QQQ. Let’s just take Microsoft, Apple, Nvidia, and Tesla. They represent a little over 30% of the QQQ and have forward P/Es of 29, 25, 53, and 51.

That’s just took expensive.

I don’t think a major crash is coming so I’m not trying to scare everyone out of the market. But true fortunes are made by thinking a bit differently…not by following the crowd.

Right now the crowd is too excited and I simply want to protect my portfolio a bit.

Here’s the transaction and my full portfolio.

If this disgusts you, I understand. Again, I’ll give a full refund to anyone who asks.

If you appreciate it. Support me by subscribing.