One of investing’s toughest tasks is market timing. In simple terms, market timing involves attempts to exit stocks, ETFs, or other securities upon signs of weakness and reenter when things are improving.
It sounds easy and lucrative, but it’s not easy for most investors, even professionals, to execute. The odds are long any investor will exit just prior to the market’s worst days and buy back right before rebounds. Said differently, there’s value in remaining invested and the Invesco NASDAQ 100 ETF (QQQM) is one of the ETF’s that makes staying invested.
The low-cost counterpart to the famous Invesco QQQ Trust (QQQ), QQQM is home to a batch of famous mega-cap growth stocks (and more) that have powered the broader market for years. While many QQQM holdings have easily outpaced the S&P 500 in recent years, those rides to the upside haven’t always been smooth, underscoring the point that remaining invested and not attempting to time pullbacks is something for investors to consider.
History Matters
For long-term investors considering QQQM, market history arguably matters more than market timing. That is to say the former erases the case for the latter.
“Looking at calendar-year returns for the S&P 500 since 1928; one thing stands out: the market rarely delivers an ‘average’ year—defined since 1950 as roughly a 10% return,” notes Mark Hackett of Nationwide. “Instead, returns tend to cluster at the extremes. About three out of four years have been positive, and many of those gains exceed the long-term average, often landing closer to 20%. Down years are less frequent and generally smaller in magnitude, with losses averaging closer to 13%.”
Adding to the case for QQQM as a consideration for buy-and-hold investors is history confirming the broader market closes higher on annual basis more often than it doesn’t, but no one has a crystal ball to pinpoint exactly when that’s going happen. Point is it’s often best to just stay invested and that’s a message advisors should convey to clients.
“The next step for investors is straightforward—but essential: stay invested. Time in the market, not timing the market, remains one of the most reliable drivers of long-term outcomes,” concludes Hackett. “The longer clients can maintain a diversified portfolio aligned with their objectives, the more the market’s natural asymmetry works in their favor.”
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