It would be nice if Brinker discussed what he learned from this bad experience on the radio and with his subscribers.
Brinker's timing for a counter trend rally was exceptional in October 2000.
The problem was with his choice of what to trade. Quality rallied while the crap circled the bowl and sank.
I added to my LRCX position on 10/17/00 at $15.88 and sold a few months later for a 64% gain (on 1/30/01 at $26).
QQQ is still down over 50% while LRCX is up nearly double today.
stockcharts.com[l,a]wacayyay[d20001016,20051231][pb40!a15.88!f][vc60][iUb14!Lc20]&pref=G
QQQ was loaded with garbage and could not rise to the surface. Stocks like Lucent sunk the QQQQ
stockcharts.com[l,a]wacayyay[d20001016,20051231][pb40!a17!f][vc60][iUb14!Lc20]&pref=G
See how Lucent was $17+ in October 2000 and today it is $3.20
=>Actually, I'm not sure if Lucent was in the QQQQ since it is a big board stock, but there were many companies in telecom that were over valued and even went under. Lucent shows it well. I lost some money in WCOM which I believe was in QQQ back then if you want another example of a crap stock.
That is one of the problems I have with the QQQQ ETF. It is a beauty pageant of volatile stocks where stocks get added simply for being popular and removed for being in the low part of their cycle. My favorite, LRCX, has been in and out of QQQQ. LRCX is "sold" from QQQQ when I think it is time to buy and it is usually added to QQQQ when I'm taking profits. Why would I want to buy an index that acts this way?
I did an experiment one awhile back where I tried my trading methods on BOTH LRCX and QQQQ. They tracked pretty well but the gains from LRCX were much larger so I ended my ONLY QQQQ experience with a small gain and decided to stick with quality securities vs. QQQQ. I still like ETFs for other sectors, but not QQQQ. There is a guy on my board, DanG, who does really well trading the QQQQ, so I've seen some make good gains with it.
By recommending QQQQ, Brinker is making a sector bet but with no filters for over valuation. I'd much rather use a Fidelity Select fund for this unless I am certain the top holdings of the ETF are a good valuation on their own merits.
It would be interesting to see a list of what companies made up the QQQQ back in 2000 and compare it to today. I believe many tech stocks were tossed out when they collapsed and replaced with retailers and donut shops that were popular. Thus if any of the tech stocks came back, they'd not get added again until they were back to near new highs. What good is that if the stuff that goes down the most is tossed out then added back when it goes up? |
