Reviewing the FNGU basket
I do like stock “baskets” in general and particularly the FNGU basket. It shields one from the vagaries and volatility of individual stocks. This is the reason index investing has become so popular and the returns have been better than what most fund managers are able to generate.
There are a few challenges to investing in stock baskets or indexes. The returns are indeed mostly better than what fund managers generate but they can still be paltry. The other is they are highly unglamorous compared to high-flying stocks and there are really no bragging rights.
So, one has to make their pick. I want risk managed returns. I manage risk by using stock baskets and following trends. I generate returns by using leveraged baskets. This has worked for me and delivered on my objectives.
The FNGU instrument has been ideally suited to my needs as it is a basket of the top 10 big technology stocks, has a 3x leverage and I use trends and my defined model to make buy, hold and sell decisions.
The FNGU has returned +60% YTD and has 10 underlying stocks that have returned:
FB +24%
AAPL +15%
AMZN +9%
NFLX +28%
GOOGL +69%
TSLA +54%
TWTR -6%
NVDA +124%
BABA -30%
BIDU -25%
So, FNGU has returned better than all but NVDA. And FNGU has also been able to weather negative returns from TWTR, BABA and BIDU. Yes, there have been severe drawdowns along the way this year. That is where my model protects me.
This is not investment advice and certainly FNGU is not for everyone given the large drawdowns that one can experience. It works for me though and I continue to use it.
Full disclosure - I currently hold FNGU based on the current bullish trends and my model. I will hold until my model tells me that the trend has reversed.