Leaning toward technology

Investing / Portfolios
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Hi all,

Currently I have a portfolio 80% VT and 20% CHSPI.

I was thinking about getting ride of my CHSPI and get 10% VEUR instead. But I was also thinking reducing my VT allocation to 70% which would allow me to go 20% QQQM (or another ETF leaning toward technology such as iShare Exponential Technology, XT).

I have a investissement strategy over 25-30years and I truly believe we are going to go through some disruptive company as AI, gene editing technology, data center, etc… for me, overweighting those ETFs seems a good strategy.
I don’t believe that the next FANGs are coming from Europe or India. Europe due to the large amount of regulation and India because all of their « brains » are going to work inside those companies in the USA.
Potentially China but I think China will face demographic and infrastructure issues first, blocking her to become the next super power.

In addition, Microsoft, Google, Facebook and Apple are already here and are almost Monopole. I hardly doubt that if any concurrent start to come with disruptive technology, it will not just be bought by those companies or those innovations will come internally.

Therefore, what is your opinion for a portfolio : 70% VT, 20% QQQM and 10% VEUR ?

Thanks for sharing your input

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Your believes and your investment choices are align but other members of this forum will certainly have different opinions.
Will other opinions influence your choices ?
The story telling of your post is the reality of the last 10 years but no one can predict it will continue at this path.

The technology companies represent a huge part of SP500 already and VT. Winners of today have been already priced by the market.
Is it not enough that you want to tilt it again ?
It’s hard to believe will always represent 61% of the cap market but who knows !
VEUR will be a safe bet to lower US capitalisation and tilt Europe. That is what I have down as I was feeling more confortable with a lower allocation for us market.
You could also build your market allocation country by country without VT.

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I agree with you when you are insinuating that I’m trying to « beat » the market.
Perhaps you are right and I’m performance chasing.

In 2010, nobody would have bet that growth and Technology would be the big winner as they were down for 10years.

We don’t know what the future will be done, I’m betting that I’m 29yo and I will have the time to recover if the market goes down. I’m betting for the moment that the new wave of technology will be the big winner as I don’t imagine the old school company such as Exxon taking over again or Walmart becoming the next FANG….

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I don’t understand trying to tilt away from the US and simultaneously using QQQM to tilt toward technology. QQQM has 60% exposure to the technology sector but 40% of it are still those consumer discretionary, health care, industrials and consumer staples that you were trying to tilt out of.

I would, instead of investing in QQQM, either:

  • find an ETF that invests exclusively in tech companies of the sub-variety you want, globally (without a focus on the stock exchange on which they’re traded) ;

  • find an ETF that invests in the top 5-10 tech giants you think dominate and will keep to dominate the market and invest in that ;

  • same as above but invest in the individual stocks of the companies you expect to win directly.

Alternatively, either dropping the tech tilt entirely (because you want to reduce the impact US companies have on your portfolio) or embracing the US-tech tilt and dropping VEUR could be options depending on what your most heavy belief is (reducing US exposure or tilting toward tech). Tilting toward tech exclusively outside of the US would be an option too but doesn’t seem to match your tech prospects thesis.

Edit: Also alternatively: drop VT completely, use QQQM for your US exposure, use a world ex-US fund (with EM included or adding an additional EM fund) for your exposure to the other countries. Match the weightings as you see fit.

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The problem is that : we don’t know who is going to be the winner in this long race. This is why I want to keep a large amount of my portfolio in VT.
VT is re-adjusting every trimester and it will do the job better than me to track exactly the world market.

My idea is more : keep VT as your main ETF, it will re-adjust. QQQM and XT would be my bet that technology will allow me a yield over 8-10% on a 25y timeframe and VEUR would be my home biais.

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Tech has extremely high valuations. Their overperformance is already priced in.

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There is nothing much more to say about this.

Expected return at these valuations is poor.

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PE ratio of the US tech stocks is at 47 currently. SP500 without tech is at 21. So you‘re paying 2.24x the price of other stocks. Why? Because of massive future growth expectations.

If you overweight tech with QQQ, you‘re not only believing that tech companies will produce massive growth in the future (which is priced in), you also believe that their growth will be even higher than that and shatter all expectations.

CAPE

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looking awfully similar to the dotcom bubble prelude.

I think p/e back then for tech was something like 50-60. We are not too far off at the moment.

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I think that running up to the .com crash there were paper napkin “companies” valued in the billions, with p/e ratios in the hundreds. The exuberance in the media was feverish, while now we have a few huge players with sky high p/e ratios, and overall pessimistic news.

Time in the market is still king.

PS I don’t overweigh in tech, but a small nVidia position bought in Jan 2023 and sold Dec 2023 paid for our Christmas holiday in Paris last year. Thank you, nVidia :wink:

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I’d say a difference between dotcom and now is that back then, there was a lot of loss-making companies. At least the magnificent 7 are profitable.

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Just buy BABA, best P/E, P/B, P/FCF in a long time :sweat_smile:

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I was pretty pissed of with BABA. I was waiting for the ANT spin-off to sell and then Jack Ma had to open his big mouth and reduce my holdings to 1/4 of the value.

Though I did buy more on the recent lows.

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Humans have a tendency to chase the next “home run”. We go to the casino and bet on one number or buy lottery tickets. Same for “speculative growth stocks”

I can’t find the article but I once read an analysis about why it is possible for investors like Berkshire Hathaway to publish their strategy and still consistently beat the market. With efficient market theory, the advantage should have disappeared long ago. This human behavior aspect was one of the reasons given

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You are right, this is purely performance chasing.
I also found this article that the biggest company were not the most profitable from an investissement point of view.
Well, I will just stick to the plan with VT portfolio, I guess.

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I don’t see a problem in performance chasing, if you have time and skills.
You can even have a systematic approach in whatever strategy for the long run and swing trade with another portion of your capital.
Starting young it’s going to work out even if you do mistakes, unless you are reckless/dont know what you are doing or we are in front of a great depression.

On the other hand if you look at some charts like NVDA or SMCI, they can go even higher, but they don’t look healthy. The more they will go up the more they will fall at a certain point.
You can also analyze the financial statements to have a better understanding.

Look in how many days SPX went from 4900 to 5000.
Not sure if it’s a good idea in 2024 to change a strategy. If a correction is going to happen, NQ will drop more…DCA in VT it’s still the “easiest” way to create wealth.

I don’t read anymore about economists calling unanimously for a recession like in 2023. So maybe it’s going to happen this time :slight_smile:

1 year ago was a good deal

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China is always an hard territory

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