Is QQQ A Good ETF To Invest In?

Pacific Wealth Management has recently bolstered its stake in Invesco QQQ Trust (NASDAQ:QQQ), an exchange-traded fund (ETF) that tracks the NASDAQ-100 Index. The wealth management firm raised its position by 8.2% in the first quarter, which, according to its most recent disclosure to the Securities & Exchange Commission, has increased its holdings to 7,192 shares, up by 544 shares from the previous quarter. The Invesco QQQ Trust forms about 1.5% of Pacific Wealth Management's total investment portfolio, ranking it as the firm's 17th largest position. The value of the firm's investment in the Invesco QQQ Trust stood at approximately $2,308,000 at the end of the reporting period.

An assortment of other institutional investors and hedge funds also adjusted their positions in the QQQ. Among them, GoalVest Advisory LLC escalated its holdings by a striking 168.3% in the last quarter of the previous year. Post-acquisition, GoalVest Advisory LLC now possesses 169 shares valued at $45,000. PayPay Securities Corp, Bbjs Financial Advisors LLC, and Glass Jacobson Investment Advisors llc also entered the QQQ pool with new positions valued at $50,000, $55,000, and $56,000 respectively, all in the fourth quarter. Surevest LLC, another participant, amplified its stake by 60.2% in the third quarter, elevating its ownership to 213 shares valued at $57,000. Institutional investors make up 42.17% of the QQQ's stock ownership.

As of Tuesday, Invesco QQQ Trust had opened at $367.93. The ETF has ranged from a 1-year low of $254.26 to a 1-year high of $372.85, with a 50-day moving average price of $337.56 and a 200-day moving average price of $319.18. The company also disclosed a dividend, payable on July 31st to stockholders of record on June 21st. The dividend of $0.504 per share will be ex-dividend from June 20th.

The current bullish enthusiasm, spurred on by AI mania, could be rational given the spectacular performance of the Technology sector (XLK), driven by companies such as Nvidia (NVDA), Apple (AAPL), and Microsoft (MSFT). The technology-driven momentum has translated into a flurry of trading activity in the Invesco QQQ Trust, as it provides a pathway to capitalize on the strength of these tech giants. With the ETF's assets under management escalating rapidly, it seems to indicate that this is increasingly becoming a crowded trade.

Furthermore, it's essential to remember that even within a bear market, stocks can witness significant rallies. In fact, the QQQ has appreciated 34.69% on a rolling 26-week basis. Historically, such movements have occurred mostly within bear markets. Therefore, it's crucial not to mistake a single segment's upswing as an end to a bear market.

Investors also need to be aware of the considerable concentration risk, a factor that can skew the narrative of a "new bull market". The top 10 companies in the QQQ currently make up 59.06% of the ETF, as opposed to 49.97% back in 2013.

Meanwhile, the Invesco Nasdaq 100 ETF (NASDAQ:QQQ) has outpaced the broader market in 2023, propelled by the mega-cap companies. However, high valuations, narrowing breadth of the advance, and potential chart patterns suggest that a short-term pullback is likely. These mega-cap companies, comprising 53% of the Q.Joining the ranks of Invesco QQQ Trust's investors, Pacific Wealth Management has increased its stake by a notable 8.2% during the first quarter. The information was disclosed in its most recent Securities & Exchange Commission submission. Now possessing 7,192 shares of the exchange traded fund, thanks to an acquisition of 544 additional shares, the Invesco QQQ Trust forms 1.5% of Pacific Wealth Management's portfolio. This investment crowns the fund as the 17th largest position of the firm. By the close of the last reported period, the shares of Invesco QQQ Trust held by Pacific Wealth Management held a substantial value of $2,308,000.

The list of institutional investors and hedge funds altering their holdings in the QQQ has been growing recently. In the fourth quarter, GoalVest Advisory LLC augmented its holdings by an impressive 168.3%, now owning 169 shares valued at $45,000. PayPay Securities Corp newly acquired a position in the fourth quarter as well, its stake valued at about $50,000. Simultaneously, Bbjs Financial Advisors LLC and Glass Jacobson Investment Advisors LLC both initiated new positions valued at about $55,000 and $56,000 respectively. In the third quarter, Surevest LLC enhanced its holdings by 60.2%, now owning 213 shares valued at $57,000, thanks to an acquisition of 80 shares. These institutional investors collectively possess 42.17% of the company's stock.

As of Tuesday, NASDAQ:QQQ had opened at $367.93. With a one-year low of $254.26 and a high of $372.85, the stock maintains a 50-day moving average price of $337.56 and a 200-day moving average price of $319.18. The company has announced a dividend to be paid on Monday, July 31st. Stockholders recorded as of Wednesday, June 21st will receive a dividend of $0.504 per share. The ex-dividend date of this dividend is Tuesday, June 20th.

Let's examine the concept of a bull market. It's not defined by an arbitrary percentage increase from previous lows, commonly 20%, nor by nominal prices, or even concentration risk. The true definition of a bull market arises when you're completely clear of a drawdown in a broader sense, something only discernible with hindsight. Even with the prediction in January that 2023 would be a year of surges due to pre-election years often being the strongest in the presidential cycle, I don't believe the bear market is behind us.

Focusing on technology has seemed to pay off, with the sector outperforming almost every other area of the stock market. This surge is driven by powerhouse companies like Nvidia, Apple, and Microsoft. This has sparked a wave of FOMO trading in the Invesco QQQ Trust, causing assets under its management to skyrocket. Yet this rapid movement raises concerns about a crowded trade, one that could go sour at the extremes.

Currently, the top 10 companies in QQQ account for 59.06% of the ETF, a substantial rise from the 49.97% in 2013. This heavy concentration of value in a handful of stocks could drive the narrative of a new bull market.

Considering the Invesco Nasdaq 100 ETF, it has managed to outperform the broader market in 2023, primarily due to the performance of the top 6 mega-cap companies. However, high valuations, the narrowing of the advance, and potential chart patterns suggest that a short-term pullback may be on the horizon. The same six companies dominate both QQQ and SPY, forming 53% and to An upswing in the shareholding position of Pacific Wealth Management in the Invesco QQQ Trust (NASDAQ:QQQ) during the first quarter highlights the increasingly assertive posture that institutional investors are taking towards the exchange traded fund (ETF). The financial giant bolstered its position by 8.2%, resulting in a total of 7,192 shares of the ETF's stock, an acquisition that swelled by 544 shares over the course of the quarter. Valued at $2,308,000 at the close of the most recent reporting period, Invesco QQQ Trust now occupies approximately 1.5% of Pacific Wealth Management's investment portfolio, placing the stock as the 17th largest position for the company.

This development mirrors a wider trend across various institutional investors and hedge funds. An emblematic instance is GoalVest Advisory LLC, which amplified its stake in the Invesco QQQ Trust by a significant 168.3% in the fourth quarter, resulting in a current total of 169 shares of the ETF's stock valued at $45,000. Similarly, PayPay Securities Corp established a fresh position in Invesco QQQ Trust during the same quarter, allocating around $50,000 to this initiative. The actions of Bbjs Financial Advisors LLC and Glass Jacobson Investment Advisors llc also align with this trend as both launched new positions in Invesco QQQ Trust in the fourth quarter with values approximating $55,000 and $56,000 respectively. Lastly, Surevest LLC, demonstrating a more long-term commitment, boosted its holdings in Invesco QQQ Trust by 60.2% in the third quarter, bringing its total to 213 shares of the ETF's stock valued at $57,000. This panorama underscores the growing clout of institutional investors, who currently own 42.17% of the company's stock.

The Invesco QQQ Trust commenced the week at $367.93 on Tuesday, showcasing a dynamic price range with a 1-year low of $254.26 and a 1-year high of $372.85. The performance is also echoed by a robust 50-day moving average price of $337.56, underscored by a 200-day moving average price of $319.18. In a noteworthy move, the company also announced a dividend, scheduled for distribution on Monday, July 31st. Shareholders who are on record as of Wednesday, June 21st will be eligible for a dividend of $0.504 per share, with the ex-dividend date declared for Tuesday, June 20th.

While this vibrant economic activity unfolds, the atmosphere is charged with a discussion about the nature of a bull market. Contrary to popular belief, a bull market is not defined by a random percentage increase from some low point, typically 20%, or by nominal prices. It is not even defined by concentration risk. A bull market truly manifests when a drawdown has been fully weathered. This state is only known retrospectively, therefore predicting the presence or absence of a bull market remains a task fraught with uncertainty.

The current sentiment that we may be in a bull market due to an AI frenzy, especially given the recent dominating performance of the technology sector (XLK), might indeed hold some water. A slew of companies such as Nvidia (NVDA), Apple (AAPL), and Microsoft (MSFT) have catapulted the technology sector to new heights. This surge has triggered an influx of Fear of Missing Out (FOMO) trading into the Invesco QQQ Trust, leading to exponential growth in the ETF's assets under management. This trend raises concerns, as it seems to be shaping into a crowded trade where the majority might be wrong at the extremes.

Invesco QQQ Trust's top 10 companies currently constitute 59.06% of the ETF, marking an increase from 49.97% in 2013. This concentration risk could tilt the balance in favor of a narrative about a new bull market.

2023 has seen the Invesco Nasdaq 100 ETF (NASDAQ:QQQ) outperforming the broader market, thanks to the performance of mega-cap companies. However, the narrowing breadth of the advance, high valuations, and potential chart patterns suggest that a short-term pullback might be imminent. These companies dominate both QQQ and SPY, making up 53% and 

26% of the portfolios respectively, leading to a situation where the performance of a small number of mega-cap stocks significantly impact the broader market index.

In terms of earnings, these tech giants have delivered impressive results, reinforcing their dominance in the market and fueling the rally. The expectations of further significant technological advancement and digital transformation are propelling investments into these mega-caps.

On the other hand, increased governmental scrutiny and potential regulatory measures could act as headwinds to the sector's growth. Increasing privacy concerns, debates on data handling and security, and issues related to anti-competitive practices have brought these tech behemoths under the regulatory radar. Additionally, there's potential for an increase in corporate tax rates and changes in global tax laws that could affect the sector.

Furthermore, potential inflationary pressures may cause the Federal Reserve to tighten its monetary policy sooner than expected, leading to an increase in interest rates. Higher interest rates can affect the valuations of high-growth tech companies, which are often based on future earnings.

Despite the outperformance of the Invesco QQQ Trust, market participants need to consider the potential risks associated with investing in an index that is significantly concentrated in a small number of stocks, especially considering that these companies are facing increased regulatory scrutiny and the macroeconomic environment is changing. While the recent uptick in institutional buying of Invesco QQQ Trust suggests strong confidence in the technology sector, it also highlights the potential for heightened volatility in the event of a market correction. Investors should therefore approach with caution and conduct a thorough risk assessment before increasing their exposure to this ETF.

Is QQQ A Good ETF To Invest In?

Invesco QQQ Trust (NASDAQ: QQQ) is a good ETF to invest in and considered one of the best US ETFs to Buy.

1. Prominent Performance: Invesco QQQ Trust has exhibited strong performance, significantly outpacing the broader market so far in 2023. This success is largely attributed to the fund's major holdings in top-performing mega-cap companies, such as Apple, Microsoft, and Nvidia.

2. Concentration Risk: A significant proportion, about 59.06%, of the QQQ ETF is made up of its top 10 holdings. This concentration level is up from 49.97% in 2013, indicating a growing dependence on a select few companies and hence, a heightened concentration risk.

3. Crowded Trade Concerns: Rapid asset accumulation and high enthusiasm around tech stocks, particularly those within the QQQ ETF, have led some market observers to worry about overinvestment and subsequent sharp pullbacks.

4. High Valuations: The top companies within the QQQ ETF are trading at high valuations, with some even reaching P/E levels that are considered excessively high. While these companies have strong growth prospects, the high valuations pose risks if the growth slows or if there are regulatory or macroeconomic changes.

5. Market Trends: The ETF's heavy focus on technology companies has paid off amid the recent tech boom. However, any shift in market sentiment or conditions could impact the performance of these tech stocks and hence the ETF's overall performance. The ETF may also be at a technical peak, suggesting a potential short-term pullback.

However, if you prefer less volatility or more sector diversification, there might be better-suited investment options for you.