Stock Market Dip: What I'm Doing
$SPY vs $QQQ and Bitcoin
I’ve been writing here consistently for a few months now, and I think many readers understand that I’m not a stock trader. I’m very much a buy-and-hold investor, looking for strong bargains and contrarian times to buy—when there’s blood on the streets.
That means I don’t try to predict stock market moves. I only react. That’s counterintuitive to everything you’ve learned in life. You’re supposed to have everything planned out, right? People who simply react in life get smacked in the head and caught with their pants down. But when it comes to long-term investing, I’d argue the opposite is true. That’s because we can’t time the market consistently.
The only "plan" I have right now is to wait for a correction in the Nasdaq 100 (QQQ), and when that happens, I’ll start a purchasing plan. That will likely consist of buying QQQ slowly and methodically, depending on how far we dip. For example, if we see a 10% correction from the highs—$539 to around $485 per share in QQQ—I’ll begin accumulating.
After likely scooping up some QQQ, I’ll still need to be careful and keep some cash on the sidelines because I want to buy more if we sell off further. This is my deployment strategy. Once—and if—we see a 10% correction in the Qs, and I spot bargains in individual stocks that I can’t ignore, I’ll likely buy those as well.
I understand that many Substack readers want and need something different when it comes to investing content.
Should they be buying puts if they’re bearish? Should they be selling puts as a way to set a limit buy? Are there quick stock flips to make a quick buck? Are there individual stocks like Philip Morris (PM) that look like they’re about to break out even further? What other stocks are on the verge of breaking out? These are all valid investing and trading strategies that one can implement, but that’s not what I’m here to discuss.
Now, by no means am I risk-averse when it comes to investing. I’m buying and holding risk assets like Bitcoin, MicroStrategy (MSTR), Nvidia, etc. But these are buy-and-hold investments. If the QQQ dips below a 10% correction, I may use leverage by buying on margin or purchasing long-dated call options. But my core investment strategy is just holding QQQ outright (the underlying asset) in a long-term portfolio.
Growth-Momentum Stocks That Got Whacked
As I was saying in the days leading up to this sell-off, my strong advice was not to chase these stocks. However, I understand that investors and traders are dipping their toes in now, hoping for a bounce. A natural bounce here would be off the 50-day moving average. Some of the stocks in this category include APP, PLTR, CRWD, HOOD, DASH, and SHOP.
Other momentum-growth stocks are trading near their 200-day moving average, while some haven’t even touched their 50-day moving average yet. If someone is bullish on PLTR for the long term—many years down the line—I have no issue with them buying now. But for me, I’ll wait for a correction in the Nasdaq 100 first.
Why Not Focus on the S&P 500? Why the Nasdaq 100?
Because I’m simply more bullish on the Nasdaq 100. It’s my bet that the Nasdaq 100 will continue to outperform the S&P 500 as it has since 2008. That doesn’t mean I’ll be right, and if I’m wrong, it’s still a somewhat diversified index.
I’m also fairly diversified myself. I own VTI, financials, industrials, etc. But I always maintain a heavier weighting in large-cap tech. For younger investors, or someone my age, it could be argued that the Nasdaq 100 is the market—the true benchmark for investing.
Sure, past performance doesn’t predict future returns, but in my view, the Nasdaq 100 is simply the more appealing index for a few reasons. Tech stocks just make more money. I’m not saying other sectors don’t, but the digital-tech economy operates on fat margins and scales incredibly fast.
Meanwhile, the older “physical” economy has what I call headaches—smaller margins, labor issues, and slower growth. Of course, every sector has its headaches, from regulatory hurdles to economic cycles. And there are best-of-breed stocks in every industry. So I’m not saying you shouldn’t diversify.
But for me, I’ll continue to favor the Nasdaq 100 as an index of choice, based on my age and risk tolerance.
Bitcoin: A Brief Discussion
Let’s talk about Bitcoin briefly. It was disappointing to see the headlines the other day: "Montana Lawmakers Vote Against Bill That Would've Made Bitcoin a State Reserve Asset."
The good news? A few years ago, we wouldn’t even be having this conversation. The fact that it's even up for discussion at the state level shows how far Bitcoin has come. Still, decisions like these—whether states vote yes or no—can impact short-term sentiment in Bitcoin.
I’ve argued before that Bitcoin behaves like a growth asset and sometimes trades alongside global growth stocks, like the Nasdaq 100. That doesn’t mean it has to correlate, and I’m not saying it should correlate. Some argue that Bitcoin trades purely on global liquidity cycles. No matter what’s actually true, one thing remains clear: here at Rigatoni Capital, we are long-term investors in Bitcoin, the asset class.
We don’t hold any other cryptocurrencies, and frankly, I don’t even think Bitcoin should be mentioned in the same sentence as the word crypto.
That said, we need to acknowledge Bitcoin’s extreme volatility. Earlier today, Charlie Bilello at Creative Planning tweeted an image on X showing all the major corrections in Bitcoin since 2010. It’s an important reminder during drawdowns—but also remember trying to predict short-term price movements in Bitcoin is a fool’s errand.
Thank you and have a wonderful night.
In case you missed it:
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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.