My daughter Jordan and her boyfriend just returned from a weekend on the California coast.
They stopped at one of our favorite locations, the Santa Cruz beach boardwalk. We’ve gone there many times to take in the beautiful scenery, sample “cuisine” (like deep-fried Twinkies), and enjoy the rides.
And that means hitting the roller coaster.
I bring that up today because many investors feel that’s exactly where the market is taking them right now.
For many, looking at a chart of the S&P 500 of late gives them a very topsy-turvy feeling – to say the least.
This explains why I get the same question a lot these days. It goes like this: if there was one tech stock you’d never sell, what would it be?
For me, the answer is easy.
The one I have in mind is a great long-term play as well as a terrific place to park your cash – should you get stopped out of one of your favorite stocks amidst the volatility.
Though he’s not exactly considered a tech investor, Warren Buffett is famous for his adage, “never sell.”
Well, you might be thinking, “of course he can say that; he’s a billionaire.”
I think that kind of logic is backward. He’s a billionaire in no small measure because he has core holdings he holds onto no matter what.
Let’s be candid. For most investors, holding on when the market is heading down or gets choppy like we see today is just too difficult.
With that in mind, I want to remind you that the road to wealth is paved with tech. This is an area brimming with the kinds of innovations that disrupt industries and make savvy investors wealth.
Just look at these $39 trillion up for grabs over the next several years in these four breakout sectors. These estimates come from a range of sources:
- Artificial Intelligence, $5.8 trillion
- Fintech, $7 trillion
- 5G High-Speed Cellular, $12.3 trillion
- Internet of Things, $14 trillion
The Macro case is just as strong.
After all, we are in the best jobs market we’ve seen since 1969. The private sector added 195,000 jobs in August, beating forecasts by more than 50,000 workers.
And, yet, the market is in turmoil. Wall Street is worried about any sign of slowing growth. Analysts also fret that our trade spat with China could hurt corporate profits across the board.
Our tariffs on China do appear to be having a negative impact on U.S. factories. Last month was the first time in three years that the manufacturing sector shrank.
I’m not mentioning these negatives to scare the bejeezus out of you. Instead, I want to make sure you know I’m fully aware of the challenges we face.
But it’s times like these when it pays to have a plan for what to do with your cash.
The Foundational Play You’ll Be Able to Count on for Years to Come
I say that because I’m a firm believer not just that you should always be in the market; you should always be in tech.
Fact is, I tell Jordan and her younger sister the same thing. And I remind them that there is a core tech holding they should never sell.
Turns out there is what I call a “tracking stock” that perfectly mirrors the tech-centric Nasdaq Composite Index. It’s a fund that you can own for many years.
In fact, the best way to play a vehicle like this is to devote a small portion of your portfolio to it and continue to buy more over the long haul. That means you buy more shares in up AND downtimes, lowering your average cost and increasing your long-term gains.
Technically speaking, the Fidelity Nasdaq Composite Index Tracking Stock Fund (ONEQ) is structured as an exchange-traded fund (ETF).
Let’s clear up one thing right now. I personally don’t believe that an index ETF of this nature is taking the easy way out. I know that more seasoned investors are looking for plays that can trounce the overall market.
I’m all about scoring outsize gains — and have the track record to prove it.
Just ask members of my monthly newsletter the Nova-X Report. They regularly have the opportunity to score double-digit and triple-digit gains.
If they’re following along, they’ve ended up owning six stocks “for free” so far this year. And much of it is due to a venture-capital “secret” I call “The Rule of 40” – a formula that helps some the biggest-name Wall Street billionaires of today make their money. You can learn more by clicking here.
But I’ve found that, in my 35 years of hanging around Silicon Valley, over the long run it pays to have a solid foundation. After that, you can add more aggressive plays on top.
This works particularly well for retirement accounts and for investing in your child’s college education because each has a very long time horizon.
Covering the Broad Global Tech Ecosystem
And make no mistake, ONEQ covers the broad global tech ecosystem. We’re talking nearly 1,900 stocks listed on the Nasdaq.
No doubt it’s rooted in titans but offers many small and mid-cap players as well. ONEQ’s top 10 holdings are a Who’s Who of tech leaders in mobile, the web, computing, biotech, and e-commerce.
We’re talking Apple Inc. (AAPL), Microsoft Inc. (MSFT) and chip giant Intel Corp. (INTC). It also includes biotech leader Amgen Inc. (AMGN), e-commerce king Amazon.com Inc. (AMZN), and social networking giant Facebook Inc. (FB).
Though ONEQ is focused on technology by definition, it also provides a good deal of sector diversification. High tech accounts for 53% of the fund. Consumer discretionary and healthcare make up 29%. The rest are in financial services and industrials.
I find it’s a great way to park your investing cash. By that, I mean, when you want to take gains on a couple of big winners but haven’t found just the right stocks to replace them, you can simply put the money to work in ONEQ while sorting it all out.
It literally pays to look at this as a long-haul play.
Reflecting tech’s role in driving the economy forward, ONEQ is up roughly 79.5% over the past five years. By contrast, we’re looking at a 48% gains for bellwether S&P.
That means during that period, this tech-laden ETF crushed the broad market by more than 65%.
In other words, this is more than just a great place to park your hard-earned cash.
It’s a great foundational tech play you can count on for many years to help you build a robust portfolio.
Cheers and good investing,
Michael A. Robinson