Published July 3, 2020
At TimingCube our focus market index is the Nasdaq 100, traded under the symbol QQQ. The Nasdaq 100 contains the 100 largest non-financial companies listed on the Nasdaq stock exchange, a purely electronic exchange that was founded in 1971. This focus on non-financial companies has served the index well over the past 30 years, a period dominated by growth in technology and electronic commerce. The index reached a fever pitch with the “dot com” boom of the late-1990s as the internet was launched. That boom culminated in the Nasdaq crash of 2000-2002. Outside of that crash, and the single-year 2008 crisis, the QQQ has delivered only positive yearly returns. That’s an extraordinary achievement, likely unparalleled in the history of stock market investing. Below are the Nasdaq 100 returns since the financial crisis, an average annualized return over +20%.
On an annual basis, it’s a non-stop positive experience. Of course, there have been some bumps along the way, not the least of which was the almost -20% slide in late 2018, and similar slump earlier this year. That’s a lot of volatility over an 18 month period, more than many investors can stomach.
TimingCube was born after the 2000 market plunge as a way to help investors navigate such volatility. In the depths of that crash, it would have been impossible to believe that our favored index would rise anew a decade later and gone on to such a string of gains. For us, it’s also hard to believe that a year from now, TimingCube will celebrate our 20th anniversary. It’s been quite a ride, and technology just keeps amazing us all – from the semiconductor and personal computer to the internet, smartphones, and, now, a heady wave of electronic commerce and AI companies.
With many of the major companies in the Nasdaq 100 very expensive by almost any metric, we know that there will be bumps in the road ahead. We are thankful to be able to provide you with guidance to navigate those bumps and appreciate you riding alongside us for these many years.
Market Update
Stocks turned the corner on a new quarter this week in a positive mood, rising all four days in the holiday-shortened week. Monday brought a +1.5% gain with investors looking past rising virus cases to focus on an increase in oil prices, and good news on Boeing’s beleaguered 737 MAX airplane. Tuesday followed up with a +1.3% rise to cap a stunning +20% quarterly rebound from the first quarter’s plunge. Wednesday opened the third quarter with a +0.5% gain as non-U.S. factories continued to trend toward normal levels and the ISM index popped back above 50, a sign of expansion. FedEx’s shares added further fuel to the positive economic thought with comments about a “Christmas-like” quarter in package traffic. The monthly jobs report, released Thursday, offered further encouragement, beating estimates for job recoveries. Stocks ticked higher by +0.5% after opening with twice that level.
Stocks more than recovered the prior week’s dip with solid gains. The S&P 500 (SPY) added +4.06%. The Nasdaq 100 (QQQ) rose +4.98% to new high ground. The small-cap Russell 2000 (IWM) rebounded +4.19%, though the index remains just below its 200-day moving average.
Warm wishes and until next week.