Samwise Model Portfolios
The portfolios below are separated by launch dates. Each portfolio is entirely independent and has no bearing on any other model portfolio. We launch entirely new portfolios during each market correction as an illustrative tool for new subscribers who weren't present during...
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I agree. The QQQ situation looks very similar to July 22.
What do you think about the quantum computing stocks like ionq, rhti, qbts, qubt?
I’m going to take a look at these and get back to you.
Rhti is a typo. Its in fact rgti
I took a very brief look at IONQ and let me just say that with non-profitable mid-caps, you take on a lot of risk of uncertainty. I’d call IONQ a speculative investment with the company reporting only $22 million in revenues and losing $172 million overall in 2023. I do need to take a closer look at these things because they may not be as “speculative” as I’m going to make it sound here.
But on a cursory look, they appear very high-risk high reward type of investments that require a lot of unknowns to go the right way in order to really capitalize. Unless you specialize or have specialized knowledge in quantum computing, this is more of a speculative investment on the future of quantum computing than anything else.
Obviously, there are a lot of different ways to make money and invest in the equity markets and we’re doing a write up on this very issue (speculative investing & stock picking versus leverage in high visibility names).
Stock picking is one way to do things. Getting in ahead of the “next big tech boom” is a very popular way to invest and that is how most retail investors view the market. Especially when you look at the size of the potential returns.
As we’re concerned, what we try to do is leverage more certain outcomes. Outcomes that we have very high visibility on. We use leaps, spreads and other long-term investment products to produce our returns.
For example, the QQQ recently fell 15% back in August right? We bought the December 2026 $430 calls during that correction and those are up some 90% now in just a few months. The QQQ is a highly diversified ETF with a lot of built-in visibility.
IONQ is up far more than that. From September to today is up 483%. But in terms of pure probability and forecasting visibility, the QQQ rallying 20% off of its $423 lows was way way higher at the time.
When I look at IONQ here at $36 versus the QQQ at $520, I’m very confident that I have a far greater understanding of where the QQQ is likely to go from here than where IONQ is likely headed.
Especially if the QQQ sustains a correction of 10-14%. At that point, my forecasting visibility is very very high. Whereas if IONQ were to fall 30-40%, I couldn’t be sure what the market is going to do with it.
That’s because it’s very speculative at the moment. It’s either going to be an absolute home run or a dud. It requires a highly specialized knowledge of quantum computing, it’s role in society, it’s prospective customer base, a good understanding of company leadership, a solid understanding of the future installed base among other things to get it right.
What I’ve found is that even if you “dive in” and put in the effort to come to understand these things really well, you still end up with a tremendous amount of uncertainty and unanswered questions.
So for me at least, I’d rather just be invested in things where I’m very highly confident in the outcome. In assets where I can use leverage to produce the types of returns one might get from holding a basket of speculative names.
We’re going to do the $5k to $1M portfolio challenge using exclusively mega cap names and index-ETFs like the SPY, QQQ, NVDA, AAPL and others.
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I’m going to take a deeper look at this and will write a post about it.
Thanks a lot Sam! I am not an expert in quantum computing, but I am a developer and I think that quantum is necessary to break some cost in power and compute, nevertheless there are so many variables in the equation that makes this still a speculative or at least less speculative than an index like QQQ or a mature company like Nvidia which has palpable goods now. Thanks again for your insights.
Dec 17th: Will Fed decision have an effect on QQQ or overall bull rally?
It depends on the nature of that decision and how the QQQ is trading as we head into the decision. Lately, with inflation stabilizing somewhat, the Fed has become less important to the market. The fed and inflation in general is currently less important to the stock market. It doest’ have as great of an impact right now.
Especially as both the Fed and inflation have met market expectations.