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Hello, this is Rich Oppa. In this video, I’d like to explain why TQ is a better stock for long-term investment than the superstitions. For those who might not know, the superstitions refer to SOXL, which is 3x leveraged in the semiconductor sector, while TQ refers to TQQ, which is 3x leveraged in the NASDAQ 100.
Now, all three major stock markets are currently rising, and the leading contributor today is Meta. As you can see, it is surging tremendously by 14.7% right now; it also rose nearly 12% in trading yesterday. Its investment in AI is now yielding tangible results. Although the layoff of over 20,000 employees might be viewed as a negative factor in the long term, it clearly has the effect of reducing labor costs and various other expenses, which has resulted in an increase in net income.
Consequently, the stock price is skyrocketing as earnings exceed market expectations. With Meta reporting strong results following Microsoft and Google, tech stocks, including big tech companies, are generally performing very well. However, the problem lies with semiconductors. Since semiconductors are inherently highly correlated with tech stocks, tech stocks...
When things are going well, the semiconductor sector generally tends to perform well. So why is the semiconductor industry the only one struggling right now? While there are various reasons, I personally believe the conflict between the U.S. and China is a major factor. The conflict between the two countries is reigniting these days, and its core lies in the struggle for semiconductor hegemony.
The U.S.-China trade war, which was a huge issue a few years ago, was also fundamentally caused by this struggle for semiconductor supremacy, and this is even closely related to Samsung Electronics. No matter how dominant Samsung Electronics is as the unrivaled number one company in the semiconductor industry, most of its core technologies are American.
Because the U.S. is so powerful, they openly threatened them, saying, " Hey, Samsung Electronics, don't export semiconductors made with our American technology to China." From Samsung Electronics' perspective, it is truly maddening. They are China's largest customer, so if they export to China, they fear retaliation from the U.S., but if they side with the U.S., they risk losing their largest customer base.
It is a situation where it is extremely difficult to explicitly take sides. This isn't just Samsung Electronics; even American companies are wary of the U.S. government. The U.S. government even issued a ban on American semiconductor companies exporting high-performance semiconductors to China. It is so extreme that American companies like Intel, AMD, and Nvidia [are] [facing] the U.S.
I have made a timid appeal to the government, saying, "Please don't do this and let us extract it; we are on the verge of death." After all, we have no choice but to be very mindful of the U.S. government. If we act recklessly, we could really face retaliation. That is why semiconductor companies take the biggest hit when relations between the U.S.
and China deteriorate. I think it would be easier to understand if I showed you my own example. If you look at the verified account I posted this month on April 2nd, Soksseul was at 79% and TQ was at 32%. But when I just checked, Soksseul plummeted to 23%, dropping by over 50%, while TQ fell to 24.6%, a mere 8% decrease.
And as of today, the returns have reversed. Now, TQ has a better return than Soksseul. No matter how confident we are that it is trending upwards and how comfortably we use automated split buying, we can never truly feel at ease with a sector that reacts excessively sensitively to specific issues. Fundamentally, if volatility is high, you are bound to feel uneasy.
Now, there is another decisive reason. The underlying index for TQ is the Nasdaq 100, and Soksseul The benchmark index is the Philadelphia Semiconductor Index, and simply looking at the portfolio, there is actually a noticeable difference in level. The Nasdaq 100 is composed of ultra-blue-chip stocks—the 100 most robust companies in the world with the highest market capitalization—such as Apple, Microsoft, Google, Amazon, Tesla, and Meta.
Surprisingly, the weight of technology stocks is only around 60%. It is not 100% tech stocks; there are financial stocks, energy-related stocks, and even pharmaceutical stocks. In fact, in a way, there is a significant overlap with the S&P 500. Therefore, you could say that it offers good defensive capabilities because it is composed of diverse sectors.
For example, last year when interest rates were rising heavily, financial stocks and energy-related stocks rose significantly, while Big Tech stocks plummeted. However, the sectors I just mentioned are all evenly distributed within the Nasdaq 100. Of course, the weight of technology stocks is higher.
So, compared to the Philadelphia Semiconductor Index, which is composed 100% of semiconductors, it can be seen as being much less affected by specific events. On the other hand, the Philadelphia Semiconductor includes Nvidia and TSMC. It consists of 30 companies, including ASML, Micron, and others. So, in terms of sheer number of companies, it is less than one-third the size of the NASDAQ 100.
Not only are there far fewer companies, but it is also composed entirely of semiconductor stocks. Furthermore, core stocks like Apple, Microsoft, and Google—which have the highest market caps and are considered stable—are all missing. So, in conclusion, for those with an investment mindset of having made high returns by perfectly timing their moves in the short term, Soksul will likely be much more attractive.
However, for those who prioritize peace of mind over short-term issues and want to take a long-term view—even if the expected return is slightly lower, even if the 3x leverage doesn't change much— TQ will definitely be much more appealing than Soksul. Personally, I actually invest a higher weighting in TQ than in Soksul, precisely for the reasons I have just explained.
I believe that holding onto investments for a long time with peace of mind is important. When I occasionally see comments, I personally wouldn't particularly recommend going all-in on Soksul. No, that is not the case. The volatility is so high that it can be quite stressful. I believe TQ is a much safer option for holding onto a position safely for the long term, rather than relying on conventional wisdom.
I have mentioned something similar before, but seeing my account's returns reverse today, I wanted to share it once again. Please keep this in mind for your investments. That is all for the video. Thank you.
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