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Yahoo
3 days ago
- Business
- Yahoo
Forget Warren Buffett's Favorite Index. This Artificial Intelligence ETF Could Potentially Turn Just $500 Per Month Into $156,000 Over 10 Years.
Warren Buffett has long touted the virtues of average investors investing in an S&P 500 index fund. However, this sector-specific ETF has crushed the S&P over the past decade. Given its diverse exposure to key AI and automation trends, it could very well repeat in the decade ahead. 10 stocks we like better than iShares Trust - iShares Semiconductor ETF › Warren Buffett has long touted the virtues of investing in a low-cost index fund that tracks the S&P 500 index. The thinking behind this recommendation is that an S&P 500 index fund will track the broader market, delivering low-risk, average returns with low costs. But there are also sector-specific exchange-traded funds (ETFs) that offer exposure to specific sectors. And while Buffett is more modest in picking specific sectors to win, it seems likely that the technology sector will, over the long run, outperform. After all, technology is making its way into more and more of our daily lives, through smartphones, cloud computing, and now artificial intelligence. The sector, with its high technical and capital barriers, has also generally produced high margins in recent years. Within the technology sector, one subsector has outperformed all others. Over the past 10 years, the overall S&P 500 has performed quite well, with an annualized return of 10.7%. That has been a really great decade, outperforming the market's long-term average. A lot of those returns have been powered by technology companies. The QQQ Trust, an ETF that aims to mirror the Nasdaq 100 index, which in itself is a proxy for the technology sector, has vastly outperformed the broader market, with a 16.7% annualized return over the past decade. But within technology, which subsector has performed even better? Semiconductors. Over the past 10 years, the semiconductor sector, as defined in the iShares Semiconductor ETF (NASDAQ: SOXX), has compounded at a stunning 20% annualized rate. That level of compounding tops even the 19.9% rate at which Warren Buffett's conglomerate, Berkshire Hathaway, has compounded -- although Berkshire has impressively grown at that average rate over a whopping 60 years! What kind of difference does a 20% rate make versus a 10.7% rate? At these levels, a mere $500 monthly contribution to the iShares Semiconductor ETF over 10 years would increase to an astounding $155,906 -- 2.6 times the amount of money contributed. That compares with just $98,941 if invested in the S&P 500 for a similar length of time. Semiconductors have a reputation for being wildly cyclical, and that is somewhat true. However, more and more chips are going into our PCs, phones, household appliances, and cars every year. In conjunction with that, game-changing technologies, such as the internet, cloud computing, and, more recently, artificial intelligence, have created entirely new industries and pools of demand. So, why so cyclical? Because semiconductors are hardware and, thus, prone to the "bullwhip" of booms and busts. The bullwhip effect happens when customers rush to buy in good times, only to freeze up and burn down their inventories when times get tough. But taking a long-term look over 10 years, the overall trend is clearly upward and to the right, with a higher rate of growth than gross domestic product (GDP), given the increasing density of semiconductors in all products and services over time. The sector also has a reputation for being fiercely competitive. While that's somewhat true, a wave of consolidation among the big players in the industry over the past 20 years has often reduced competition to a few players in each industry subsegment. That has helped the sector increase margins relative to the past, leading to outsized profit growth. Here are the iShares Semiconductor ETF's top 10 holdings: Company % of iShares Semiconductor ETF Assets Broadcom 8.7% Nvidia 7.9% Texas Instruments 7.4% Advanced Micro Devices 7.1% Qualcomm 6.8% KLA Corporation 4.5% Applied Materials 4.3% Monolithic Power Systems 4.3% Lam Research 4.2% NXP Semiconductors 3.9% Some would say it would be a stretch for the iShares Semiconductor ETF to repeat last decade's performance in the upcoming decade. After all, 10 years ago, the cloud computing revolution was just gaining critical mass, and the artificial intelligence revolution, ushered in with the release of ChatGPT in 2022, hadn't happened yet. However, it appears to be a pretty good bet that the iShares Semiconductor ETF will continue to outperform over the long term. As long as technological innovation continues apace, humans will continue to use technology to improve their lives, save time and money, and boost connectivity. That means more semiconductors. And as semiconductor-led innovation also creates entirely new markets (like AI), the semiconductor sector should continue to outgrow GDP. Given the massive amount of capital and technological resources required to compete, I would also expect relatively stable competition and the preservation of margins. No doubt, there will be heated competition for AI supremacy in the years ahead. However, the beauty of owning an ETF is that it will capture the winners and lower its allocation to the losers over time. Warren Buffett's late longtime partner, Charlie Munger, used to say that over the long term, a stock's return tends to mirror its return on invested capital (ROIC). Given the generally high ROIC of leading chip designers, manufacturers, and equipment companies today, it seems likely that the next decade will also be a positive one for semiconductor stocks, just as the last one was. Before you buy stock in iShares Trust - iShares Semiconductor ETF, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and iShares Trust - iShares Semiconductor ETF wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $651,049!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $828,224!* Now, it's worth noting Stock Advisor's total average return is 979% — a market-crushing outperformance compared to 171% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of May 19, 2025 Billy Duberstein has positions in Applied Materials, Berkshire Hathaway, Broadcom, KLA, Lam Research, and Texas Instruments. The Motley Fool has positions in and recommends Advanced Micro Devices, Applied Materials, Berkshire Hathaway, Lam Research, Nvidia, Qualcomm, Texas Instruments, and iShares Trust - iShares Semiconductor ETF. The Motley Fool recommends Broadcom, Monolithic Power Systems, and NXP Semiconductors. The Motley Fool has a disclosure policy. Forget Warren Buffett's Favorite Index. This Artificial Intelligence ETF Could Potentially Turn Just $500 Per Month Into $156,000 Over 10 Years. was originally published by The Motley Fool
Yahoo
05-05-2025
- Business
- Yahoo
The Best Technology ETF to Invest $2,000 In Right Now
A heavy focus on tech-driven enterprises has worked wonders for this popular ETF that has crushed the S&P 500 in the past decade. A low expense ratio means that investors keep more of their money over time. Recent market turmoil, driven by economic uncertainty, is providing investors with a buy-the-dip opportunity. If investors want broad access to the stock market in their portfolios, they usually direct their attention to the S&P 500 (SNPINDEX: ^GSPC). The popular benchmark is a gauge to measure the performance of U.S. equities at large. And in the past decade, it has generated a total return of 213% (as of April 28). Not too shabby. But what if you want greater exposure to a particular industry or theme, such as technology? There are specific exchange-traded funds (ETFs) for that. In fact, one booming ETF has crushed the S&P 500 in the last 10 years. Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue » Here's a look at the best tech ETF to invest $2,000 in right now. The internet has and will continue to shape our economy and society. With this in mind, it makes sense why investors might want to skew their portfolios more to technology businesses. Instead of the S&P 500, it's time to learn more about the Invesco QQQ Trust (NASDAQ: QQQ). This ETF tracks the performance of the Nasdaq-100, which consists of the largest 100 nonfinancial companies that trade on the namesake stock exchange. The top 10 stocks represent a sizable 49% of the portfolio. Unsurprisingly, the "Magnificent Seven" stocks have a monumental impact on the ETF's performance. So, if investors aren't bullish on these businesses and the trends that power them, like digital advertising, digital payments, cloud computing, electric vehicles, and artificial intelligence (AI), then it might be a good idea to think twice. However, if you're optimistic about these tailwinds looking toward the future, the Invesco QQQ Trust is a smart choice. The added benefit is that there's instant diversification, eliminating the need to successfully pick individual stocks. The Invesco QQQ Trust currently has $298 billion in assets under management. This figure is worth pointing out because it highlights the huge scale of the ETF, showcasing how much capital believes in this strategy. In other words, investors aren't wasting time considering an esoteric fund that has minimal assets or public interest. Had you invested $2,000 in the Invesco QQQ Trust exactly 10 years ago, you'd have nearly $9,300 today. This translates to a wonderful 16.6% annualized gain. Ongoing success of the tech sector overall, which is becoming a more pronounced driver of economic growth, certainly had an impact on the return profile of this ETF. For such an impressive gain, you'd be forgiven for assuming that the fees would be very high. This couldn't be further from the truth. The Invesco QQQ Trust carries just a 0.2% expense ratio. That hypothetical $2,000 invest would only see $4 go to fees on a yearly basis. This means you get to keep more of your money over time instead of seeing it drained from your account. While the Invesco QQQ Trust's past performance is exceptional, investors shouldn't necessarily expect similar gains in the future. Of course, it could happen. But it's a good idea to set the right expectations. What investors should really care about is putting money to work now, especially because the Invesco QQQ Trust is trading 12% below its all-time record. There are worries that President Trump's radical trade policies will lead to economic turmoil in the not-too-distant future. And this has investors taking a cautious approach. But the stock market has always recovered from bear markets and corrections to ultimately reach new highs. Choosing to invest $2,000 right now in the Invesco QQQ Trust will likely prove to be a very lucrative move for your portfolio. Before you buy stock in Invesco QQQ Trust, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Invesco QQQ Trust wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $623,685!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $701,781!* Now, it's worth noting Stock Advisor's total average return is 906% — a market-crushing outperformance compared to 164% for the S&P 500. Don't miss out on the latest top 10 list, available when you join . See the 10 stocks » *Stock Advisor returns as of April 28, 2025 Neil Patel has positions in Invesco QQQ Trust. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. The Best Technology ETF to Invest $2,000 In Right Now was originally published by The Motley Fool Sign in to access your portfolio
Yahoo
17-04-2025
- Business
- Yahoo
Bitcoin and U.S. Equities Show Early Signs of Fading Correlation
Wednesday's price action between bitcoin (BTC) and U.S. equities caught investors' attention highlighting early signs of a fading correlation between the two. In a typical diversified portfolio, assets are expected to show little to no correlation. For example, gold has continued to hit all-time highs, setting 12 new daily records this year, demonstrating a clear dislocation from U.S. equities. While bitcoin has often been labeled a leveraged play on the Nasdaq 100, recent trend suggest that relationship may be weakening. Take BlackRock's iShares Bitcoin Trust (IBIT), which trades only during regular U.S. market hours. On Wednesday, it closed up 0.46%, even as the Nasdaq 100 plunged more than 3% , down as much as 4.5% at one point, which would've marked its fifth-largest point decline in history. Strategy (MSTR), a bitcoin-levered play included in the Invesco QQQ Trust (QQQ) finished the day up 0.30%, even as all of the Magnificent Seven tech stocks closed in the red, underscoring the growing divergence. Throughout the day, the correlation between bitcoin and the Nasdaq fluctuated. For instance, while Fed Chair Jerome Powell was speaking, both assets dropped in tandem. However, bitcoin later rebounded above $84,000, while the Nasdaq continued to hit new intraday lows before recovering into the close. Powell's comments leaned more hawkish than expected, citing inflation concerns driven by tariff uncertainty and increases, labeling them an 'evolving risk.' Short-term inflation expectations have also moved higher. Markets were especially unsettled by Powell's response to the question: Is there a Fed put for the stock market? Is there a Fed put for the stock market? Powell's reply: 'I'm going to say no.' The 'Fed put' is a long-held market theory suggesting the Fed will step in to stabilize markets during sharp downturns, a safety net that bitcoin, as a bearer asset, inherently lacks. The open question now: Was Powell bluffing, or is the Fed truly stepping away from its role as market backstop? Sign in to access your portfolio
Yahoo
03-04-2025
- Business
- Yahoo
Watch These QQQ Price Levels as Nasdaq 100 Fund Slumps on Tariff Fears
The Invesco QQQ Trust, an ETF that tracks the Nasdaq 100 index, plunged early Thursday after President Trump imposed sweeping reciprocal tariffs yesterday. A recent bullish momentum shift looks in jeopardy, with the fund projected to open near this week's low. Investors should watch key support levels on QQQ's chart around $448 and $430, while also monitoring vital resistance levels near $503 and $ Invesco QQQ Trust (QQQ), an exchange-traded fund (ETF) that tracks the Nasdaq 100 index, plunged early Thursday after President Trump imposed sweeping reciprocal tariffs yesterday. . The fund's top three holdings—iPhone maker Apple (AAPL), software giant Microsoft (MSFT), and AI favorite Nvidia (NVDA)—all suffered steep after-hours losses as the tariffs were announced. Investors worry the new duties may inflate manufacturing costs and consumer prices, both of which could weigh on corporate profits. Prior to today's premarket slide, the QQQ fund had tumbled 7% since the start of the year amid concerns over tariff uncertainty, significant AI spending and moderating Big Tech earnings. The QQQ was down more than 4% at around $426 shortly before the opening bell. Below, we take a closer look at the QQQ fund's chart and apply technical analysis to identify key price levels worth watching out for. Since setting its record high in mid-February, the QQQ fund has trended sharply lower, forming a classic double top pattern in the process. Importantly, increasing trading volume has accompanied the move lower, indicating active selling by index-tracking market participants like institutional investors and pension funds. Earlier this week, the fund's price slumped beneath the mid-March low before staging an intraday reversal to close above that closely watched level. However, the recent bullish momentum shift looks in jeopardy. Let's analyze the QQQ fund's chart to identify key support and resistance levels that investors may be monitoring. A decisive close beneath this week's low could see the fund initially decline to around $448. The area on the chart would likely provide support near last year's March peak, which also closely align with troughs in May and September. Selling below this level brings key support at $430 into play. Investors who seek buy-and-hold positions in the fund could look for entry points in this region near a trendline that connects a range of trading levels on the chart between January and August last year. Interestingly, this location also sits in the neighborhood of a projected bars pattern target that takes the fund's impulsive move lower from late February to early March and repositions it from the high of the recent upswing high. A close above the 200-day moving average (MA) could see the fund's price test the $503 level. This location may provide overhead selling pressure near the mid-January trough and last year's July peak. It's also worth pointing out that this area roughly sits at the 50% Fibonacci retracement level when applying a grid from the February high to March low. Finally, a resumption of the fund's longer-term uptrend may propel a move to around $537. Investors who have bought at lower levels may decide to lock in profits in this area near the December and February peaks that mark the the QQQ ETF's double top. The comments, opinions, and analyses expressed on Investopedia are for informational purposes only. Read our warranty and liability disclaimer for more info. As of the date this article was written, the author does not own any of the above securities. Read the original article on Investopedia Sign in to access your portfolio
Yahoo
30-03-2025
- Business
- Yahoo
The Best Technology ETF to Invest $500 in Right Now
When mentioning the stock market's performance, the investment community usually focuses on the S&P 500 index. This broad index contains 500 large and profitable U.S. businesses. In the past decade, it has generated a total return of 236%, which is an impressive feat. But perhaps you're interested in the potential to produce even better returns. This might guide you to wanting greater exposure to companies with a tech focus. Luckily, there's an investment vehicle that has significantly outperformed the S&P 500. Continue reading to learn about the best technology exchange-traded fund (ETF) to invest $500 in right now. It's time to get familiar with the Invesco QQQ Trust (NASDAQ: QQQ). As of March 26, it had $311 billion in total assets. And it's invested in the 100 biggest nonfinancial companies that trade on the Nasdaq exchange. If you want to own disruptive and innovative businesses, then this ETF might be the right choice for you. It has a high concentration in the "Magnificent Seven," with this group combining to represent 42% of the QQQ's asset base. These companies have generally exhibited rapid growth in recent years. What's more, they benefit from some major themes, such as artificial intelligence, digital advertising, digital payments, cloud computing, and streaming entertainment, for example. Technology continues to change at a rapid pace as it shapes our economy. Consequently, it can be difficult to identify single winners within various secular trends. This highlights the beauty of the Invesco QQQ Trust. By owning 100 different stocks, investors benefit from broad diversification, a surefire way to capture the most successful enterprises of tomorrow while avoiding single-stock risk. It's certainly important to know what stocks and industries are represented in an ETF. However, investors care most about performance. The QQQ hasn't disappointed in this regard. In the past 10 years, it has generated a total of 406%. This means a $500 investment made in late March 2015 would be worth over $2,500 today. This is an incredible outcome that drastically outperformed the S&P 500's total return of 236%. Of course, the caveat is that investors had to endure greater volatility along the way. Besides a fantastic gain, it's also worth paying attention to the costs. The QQQ carries an expense ratio of 0.2%. On a $500 capital outlay, this translates to $1 in fees. Instead of fattening the pockets of the ETF sponsor, more of your hard-earned savings are kept over time. There is also an often-overlooked benefit to investing in the Invesco QQQ Trust. It's a very low-maintenance strategy. Investors do not need a finance degree, expert financial modeling skills, or lots of time spent reading through financial statements and listening to earnings calls to benefit from the investment. The track record of the Invesco QQQ Trust is undeniable. And right now, investors are being presented with a worthwhile opportunity to put some money to work. That's because this ETF currently trades 9% off its all-time high, a mark that was reached in February. There are certainly fears swirling about the direction of the economy, mainly due to policy decisions by the presidential administration. The market hates uncertainty, which has added pressure to stocks recently. But long-term investors should take advantage. Allocating $500 right now to the Invesco QQQ Trust looks like a very smart move. An even better decision would be to dollar-cost average additional capital at regular intervals in the future. Not only does this allow you to buy at different entry points, but it also helps to build a habit of consistent investing. The best tech ETF has a stellar history of compounding capital. Just be sure to maintain a time horizon that spans several years and decades to reap the benefits. Ever feel like you missed the boat in buying the most successful stocks? Then you'll want to hear this. On rare occasions, our expert team of analysts issues a 'Double Down' stock recommendation for companies that they think are about to pop. If you're worried you've already missed your chance to invest, now is the best time to buy before it's too late. And the numbers speak for themselves: Nvidia: if you invested $1,000 when we doubled down in 2009, you'd have $284,402!* Apple: if you invested $1,000 when we doubled down in 2008, you'd have $41,312!* Netflix: if you invested $1,000 when we doubled down in 2004, you'd have $503,617!* Right now, we're issuing 'Double Down' alerts for three incredible companies, and there may not be another chance like this anytime soon.*Stock Advisor returns as of March 24, 2025 Neil Patel and his clients have no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. The Best Technology ETF to Invest $500 in Right Now was originally published by The Motley Fool Sign in to access your portfolio
