We've likely all heard about the Dogs of the Dow strategy by now, which entails buying up the highest-yielding, often worst-performing stocks within the Dow Jones Industrial Average at the start of the new year.
Count 2025 as yet another year in which the AI investment theme has loomed large. That's been to the benefit of market participants with exposure to AI-related equities and ETFs.
As was the case with internet stocks in the late 1990s and the housing market circa 2006, the AI industry is an epicenter of bubble talk. Predictably, that chatter is relevant to investors engaging with AI stocks and ETFs heavily allocated to those names.
The AI boom has been a driving force for the tech-heavy indices, and while a correction could have the potential to be more painful for the growth- and AI innovation-heavy Invesco QQQ Trust (NASDAQ:QQQ) and other similar ETFs out there, longer-term investors who can weather a storm without breaking a sweat might be in for greater rewards over the long run.
Perhaps living up to the dubious reputation of Fridays in October, stocks were drubbed last Friday. The Nasdaq-100 (NDX) and the S&P 500 slid 3.56% and 2.71%, respectively.
There's no denying that the artificial intelligence (AI) trade has provided momentum to ETFs such as the Invesco QQQ Trust (QQQ) and the Invesco NASDAQ 100 ETF (QQQM). Meanwhile, investors have pondered the extent of AI's transformative nature and how much adopters are going to dole out in the AI arms race.
Much has been made about the practicality of artificial intelligence spending. This is understandable, because some of the numbers floating around are astronomical.
The Nasdaq-100 Index (NDX) is higher by 87.4% for the three years ending August 28. And the Magnificent Seven stocks are taking on larger percentages of other widely observed benchmarks.
Since 1999, the Invesco QQQ Trust ( NASDAQ: QQQ ) has been the “go-to” Exchange Traded Fund of institutions and aggressive growth-minded investors looking for Nasdaq-100 Index tracking and equivalent gains.
Subscribers to Chart of the Week received this commentary on Sunday, August 24.
Tech slump dragged QQQ lower as investors eye rotation into value ETFs like RPV, consumer staples ETFs like IYK, and dividend-focused ETFs like FDL.
Betting against growth and tech equities was a winning idea for a time earlier this year. But that span was fleeting.