Nasdaq 100 Correction So Close, Yet So Far
$QQQ
At some point, we bounced today, and the QQQ refused to correct to my $485 level of interest (which is around a 10% correction). We got extremely close, dipping slightly below $488, but obviously, algos, traders, and investors didn’t want to wait for a perfect $485 level.
So, am I frustrated that I missed the dip? No, I’m not that desperate. I can wait forever if I have to. Between years 1997 and 2020, the S&P500 has experienced approximately 13 corrections of 10% or more. This averages to about one correction every 1.9 years.* This is very similar to the Nasdaq.
To be clear, when discussing active portfolio management, I have no issue with anyone who is Dollar Cost Averaging (DCA) into a portfolio or a retirement vehicle like a 401(k). In fact, I assume everyone reading this already has a DCA strategy in place. What I’m referring to in my writing is a separate investment portfolio—one that is in addition to DCA-based retirement fund.
As I’ve stated before, once QQQ gets to a 10% correction, I also look at other opportunities, whether in sector ETFs or individual stocks. However, I was never planning to go all-in at that level. My approach is to nibble, keeping dry powder for further downside if it comes.
One name that caught my attention today was Amazon, which briefly dipped below $200. A few years ago, I wouldn’t have hesitated to add at that level. But I’m getting older (turning 41 this week), and with age comes patience. I’d rather see QQQ hit my preferred entry point before adding to my Amazon position.
On CNBC’s Halftime Report, Josh Brown mentioned his strategy of focusing on stocks that are holding up well or performing better than the market during this pullback. His logic is that these names will be the first to make new all-time highs when the market recovers. It’s a reasonable approach, but I lean toward the opposite strategy. Since my investment timeline is nearly infinite, I prefer to look through the wreckage for beaten-down names that the market hates right now. Neither approach is right or wrong—they're just different philosophies on risk and reward.
Tariffs: A Short-Term Distraction
Are the tariff headlines behind us? I don’t know, and frankly, I don’t care because they aren’t influencing my investment decisions.
That said, I do think there’s a chance a deal gets done in the coming days. Yes, it’s a pain, and I won’t argue that tariffs on Canada and Mexico are right approach by Trump. But what stands out to me is how poorly Justin Trudeau is handling negotiations. When it comes to deal-making, emotional reactions rarely lead to good outcomes. If he’s not careful, he could end up digging himself an even deeper hole.
Final thoughts
At the end of the day, long-term investors need to stay patient, and let the market come in if it wants to come in.
Let’s say Mr. Market is trying to sell his house. Every single day, he knocks on your door and gives you a price, adjusting it based on his mood. On the days he’s feeling anxious, pessimistic, or downright miserable, his price drops significantly. But when he wakes up feeling optimistic and full of confidence, he jacks the price right back up. The price swings seem volatile, sometimes erratic, but do you don’t let them shake you.
You have a price in mind, and you’re in no rush. You’re not desperate, because you know that sooner or later, Mr. Market will come around to meet your number. It’s not about chasing his moods, it’s about waiting for him to agree to your terms. If he wants to sell to me for $487, that’s fine—but I’m not budging a lick. My price is set at $485, and he’ll have to come to me.
As the investor, I have the power to get up from the table and walk away.
In case you missed:
References:
O’SHARES STRATEGY SERIES - 10% Corrections
Disclaimer: This blog is for informational purposes only and does not constitute financial advice. All opinions are my own, and I am not a financial advisor. The information provided reflects my personal views and is intended to encourage discussion and thought among readers. Investments involve risk, including the loss of principal, and past performance is not indicative of future results. Always conduct your own research or consult with a qualified professional before making any financial decisions.