Fed Slows Rate Hikes, Nasdaq Soars Over 20%

In my view, the strongest dollar-cost averaging strategy is "investing for life": aiming not to sell, continuously buying high-quality assets, this is the great way of lifelong investment. The assets ...

In my view, the strongest dollar-cost averaging strategy is "investing for life": aiming not to sell, continuously buying high-quality assets, this is the great way of lifelong investment. The assets that are the most twisted and upward in the long term, and have the most new highs, are precisely that avenue; just step onto it.

However, many people prefer to take shortcuts, abandoning the flat road without realizing it, and investing is known to be easy but difficult to practice.

Looking at the current market, where are the most advanced technology companies? The NASDAQ-100 Index, this is the "high-growth" sector worth paying attention to!

Firstly, the rapid development of artificial intelligence.

The NASDAQ-100 selects 100 non-financial stocks listed on the NASDAQ exchange as its components, with a distribution of equity weights mainly focused on large-cap stocks, and the market value of the constituent companies is mostly over $100 billion, representing the leading companies in most industries. Companies with a market value of $100 billion account for nearly 80% of the index weight.

Similar to our STAR 50, the NASDAQ-100 includes mostly high-tech companies in the United States, such as Apple, Microsoft, Google, Cisco, Intel, etc. This index has a high technology content, with 67% being high-tech companies in the United States or even globally.

From the perspective of sector growth and investment value, the NASDAQ-100 must be able to achieve a long bull market. These high-tech companies are the most commercially competitive companies in the world, with high barriers and strong profitability, profits will inevitably drive a long bull market!

Especially this year, the continuous fermentation of overseas ChatGPT applications, under the wave of AI, the profit growth expectations of American technology leaders have continued to increase. Benefiting from the development of artificial intelligence, the NASDAQ-100 ETF has shown a significant increase this year.

Secondly, the market's expectations for the easing of interest rate hikes by the Federal Reserve are increasing.

Since last March, in order to curb inflation, the Federal Reserve has raised interest rates a total of 7 times within the year, accumulating 425 basis points, reaching the highest level since the 2008 international financial crisis, putting pressure on the global capital market.Under the Federal Reserve's interest rate hike cycle, liquidity tightens, and the U.S. stock market also suffers a heavy blow.

However, this year, after experiencing a series of tragedies such as the bankruptcy of some U.S. banks led by Silicon Valley Bank, being acquired, and stock price plummeting, the Federal Reserve has become more cautious in formulating interest rate hike policies. The market generally believes that the monetary policy of the United States is gradually turning to a loose cycle, and liquidity is increasing, which is a major benefit for the U.S. stock market.

Looking at the data, in 2022, the U.S. stock market fell more sharply than the A-share market, but since the beginning of this year, the Nasdaq 100 has risen by as much as 26%, almost making up for last year's decline!

Looking ahead, I have two views:

On the one hand, entering at the end of the first interest rate hike period and holding the Nasdaq 100 for more than a year has a very high probability of winning. Whether from the perspective of the overall U.S. stock market or the gradual industrialization of the ChatGPT concept, it is beneficial for this sector.

On the other hand, the Nasdaq 100 has already risen a lot since the beginning of this year. Looking at the price-to-earnings ratio over the past five years, the current Nasdaq price-to-earnings ratio is around 31 times, and the percentile over the past five years is 67%. The index valuation is no longer cheap, and buying needs to control the rhythm and position.