With all major indexes up on the year… it’s time to look at their benchmark ETFs.
After all, it sure is cheaper to get in on a rising market with a basket of stocks rather than trying to buy individual stocks.
And in today’s Buy This, Not That video… we dive into large cap… small cap… tech… and global ETFs… to see where our money will be treated best.
So which indexes are BUYS… and which are NOT?
And WHEN should you buy?
Get all the details in today’s video. Click on the image below to watch it.
Transcript
Hey everybody. Shah Gilani here with your weekly BTNT… as in, Buy This, Not That.
A lot of you have been asking me about benchmark ETFs that track various markets. So let’s take it from the top.
First up… the S&P 500, the SPY, the big boy, the big daddy of all the benchmark ETFs, in my opinion.
Why? Because the S&P 500 is the institutional benchmark of what the stock market is. And guess what? It’s a BUY.
Yes, I know it’s had a tremendous year. The S&P is up 26% year to date, people. That’s a fantastic run. I think we got enough momentum behind the markets where the S&P 500, the SPY, can continue throughout 2024… not without perhaps a dip here and there, but those dips will be buying opportunities.
So as far as SPY goes, it’s a BUY, people.
Now, a lot of you have been asking me about the rest of the world markets, and an ETF that came up was the EFA. That’s the symbol for the iShares MSCI EAFE ETF, where EAFE stands for Europe, Australasia and the Far East. It’s a big cap market index of all those big companies in Europe, in Australia, New Zealand and the Far East. It’s up only 13.6% in 2023.
So as far as EFA goes… and the rest of the world, big cap stuff… NOT. There’s no point in chasing that. I’m going to get to some ETFs, some market benchmarks that I think are going to do well because they’ve been really beaten up, and they haven’t participated. But as far as EFA goes, NOT. It just hasn’t done well, and I don’t think the rest of the market globally is going to do what United States markets are capable of doing. So as far as EFA, NOT.
Next up, while we’re talking about big market cap stuff, how about the Nasdaq Composite. And if you want to play the Nasdaq Composite, which includes all of the stocks listed on Nasdaq, you can play it with ONEQ. Now, ONEQ is the big cap Nasdaq Composite ETF. It tracks the Nasdaq Composite, all Nasdaq stocks. It’s up 47% this year. Pretty fabulous. But I’m going to say NOT.
Why? Because as good as 47% is, I like the Q’s better. Now the QQQ is the ETF that represents and tracks the Nasdaq 100. The Nasdaq 100 consists of the Nasdaq Composites, the 100 largest market cap stocks, non-financial stocks.
So pretty much the biggest of the big tech companies that are in the Nasdaq Composite make up the Nasdaq 100. Now, you trade those, everybody trades those, by trading the triple-Q, the QQQ. It is up on the year to date 57%. So yes, I think you buy the QQQ if you want to ride momentum in big cap market tech stocks into 2024.
It doesn’t, again, mean we’re not going to have bumps. But I think any bumps we get, any sell-offs we get, any dips we get in 2024, are probably going to be huge buying opportunities. I hope we get some for a lot of the folks who are on the sidelines, in that $6 trillion worth of money market funds hanging out, missing this rally. So triple-Q, yeah, that’s a BUY.
Next up, speaking of tech, we’ve got the big cap market technology ETF, which is XLK. That’s the [Technology Select Sector SPDR Fund], XLK. It’s up 60% this year. So yes, it’s a BUY. Yes, I know it’s up. I know some of these are looking a little overbought, but yes, you want to play the momentum trade, yeah. You want to buy XLK.
It’s definitely a BUY going into 2024… and probably throughout 2024. Buy it on dips.
Now, its smaller brethren is the [Invesco S&P SmallCap Information Tech] ETF. That symbol is PSCT. It’s up 23%, which is great year to date, but it’s a NOT. Why would you buy PSCT when you can buy XLK?
So when we’re comparing apples to apples, some of them just look a little shinier than others.
Last but not least, I get asked about beaten-up stuff. What I’m asked about most is the Russell 2000. Now, when we track the Russell 2000, we’re mostly looking at [the iShares Russell 2000 ETF, ticker] IWM. Now, that is a great ETF, which has not performed as well as the rest of the big benchmark ETFs. It’s up a very handsome 27%, excuse me, 16.28% year to date… 16.28%, that’s very nice. That’s in any other year a great year, but not relative to 60% for big cap tech. So I like it down here. So IWM is a BUY. I think small caps are going to play catch up in 2024. So I like IWM down here. It’s a BUY, people.
And last but not least, a lot of you have been asking me about China. And, of course, the benchmark ETF for China is the [iShares China Large-Cap ETF, ticker] FXI. That’s the big market cap tech sector, and all-inclusive, including financial. Yes, that’s a little scary, big market cap tech stocks capturing China, the Chinese market. So FXI, pretty lousy year. Down 27%. But I’m calling it a BUY. I think FXI is a buy here because I like bottom fishing. If China can turn around, especially its tech sector, FXI is going to take off. Financials are going to probably struggle in China, but I think the tech sector has enough juice behind it, and it’s going to be pushed by the government because they need the market to do a lot better. So I like buying FXI down here for 2024. I think it’s going to be a good bottom-fishing play.
That’s it for today. I’ll catch you guys next week with more BTNT stocks.
Cheers, everybody.
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Source: Total Wealth