Would you use this?

[Mark Vincent]

Hello,

I created a very simple strategy that I would like others to comment on. I combined QQQ with Nasdaq 100 leaders. The over all results give a higher return, Higher sharpe and lower volatility compared to both. The other benefit is when you only hold QQQ you are trading less. Therefore why or why not would you use this in place of Nasdaq 100 leaders. Below is the .ini file.

Cheers,
MV

[StrategyTitle]
QQQ vs Nasdaq leaders
[StockItems]
#Nasdaq100 leaders=#Nasdaq100,2,1,1,0.00
QQQ=PowerShares Nasdaq-100 Index,2,1,1
[StockSets]
StockSet113=QQQ vs Nasdaq leaders,1,3,StockSetStrategy113,2020-12-18,2020-12-18,#Nasdaq100 leaders@1,QQQ@1
[StockSetItems]
StockSet113Item1=11,StockSet113Item2,0,00000004,2,
StockSet113Item2=11,StockSet113Item3,1,00000008,2,
StockSet113Item3=10,StockSet113Item4,2,00000010,3
StockSet113Item4=01,StockSet113Item5,2,00000020,3
StockSet113Item5=-,-,2,00001000,3,
[StockSetStrategies]
StockSetStrategy113=2,2,,11,10,,1
[StockSetStrategyParameters]
StockSetStrategy113=-3,3,60,3,-2,7,-1,7,-10,7,-1,7,0.00,0,0.00,0,0,0,0.00,0,0.00,0,0.00,0,0,0,0,0,0,0,0,0,0.00,4,0.00,4,0,0,0,4,0,4,0.00,0,0.00,0,0.00,0

[Frank1 Grossmann]

Why not do this. Personally, I am not a big fan of stock picking. As the FAANG stocks make about 45% of the Nasdaq valuation, anyway it was difficult to beat QQQ with single stocks other then the FAANG stocks. The problem of good performing single stocks is that they behave like a leveraged version of QQQ. So if you invest in these, you even if they go up fast, your risk is several times higher. Oputperforming is not always better. It depends from the risk. Most people do not understand this. Stockpicking also makes not much sense in today’s markets where company fundamentals are of no interest anymore to the investors. I personally prefer strategies which invest in big indexes like the US market strategy

[Mark Vincent]

Thanks Frank not sure I understand how it is leveraged.

QQQ has 100 stocks but 45% of the market cap is FAANG. The nasdaq 100 leaders only picks 4 stocks but will rarely pick FAANG. Therefore QQQ is more diversified from the amount of stocks but not the market cap. Which is more risky or leveraged is hard to understand. Mkt Cap vs the amount of stocks?

If you only ran a universe of stocks that included FAANG and use QT to create a strategy to pick 2 of the FAANG stocks each month the drawdown is half that of QLD and so is the Volatility but the returns are not half. Does my Strategy of picking 2 FAANG stocks each month have more risk than QLD or Nasdaq 100 leaders?

Thanks Again,
Mark V.

[Author]

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