Title says it all. I’d been pretty one-track-minded about investing in Fidelity’s index funds that approximate the S&P500, but I’m looking at performance over time of S&P vs NASDAQ and NASDAQ seems far stronger. Curious what people have to say about this.
1 Like
Hey Philip!
I remember a day in college I was sitting on the bus on the way home from a track meet. One of my teammates was a finance major and our coach asked him where he thought the NASDAQ was gonna go soon. I think it was at 4,000 at the time and my teammate said it would probably go to 6,000 within a year. That was in the year 2000. The NASDAQ then dropped to 1,300. It didn’t see 4,000 again for 13 years. It didn’t hit 6,000 until 17 years later. Including dividends it had ~90% growth in 17 years. Compare that to the S&P 500 over the same 17 years, it had about 130% growth over the same time.
So when you look backwards at the NASDAQ chart and see it has recently outperformed and ask why not invest in the NASDAQ, I’m reminded of my coach getting greedy at the end of the dotcom boom. Since the NASDAQ is more tech-heavy than the broader indexes, it has recently outperformed. But what you really want to know is what is going to do best going FORWARD. I basically think you’re chasing past performance here.
Take a look at this post and this post and this post where I try to talk other users off the ledge of chasing past performance. 
And for what it’s worth, I actually prefer a “Total” US stock market index fund over the S&P 500, as it’s more diversified. I just use the S&P 500 in a lot of examples because there’s a long history of easily accessible data.
3 Likes
Frustratingly good advice as always. I expect that tech will do very well in a post-covid world, but your response in that last post that you linked seems wicked smart.
1 Like
Total US stock market Index fund 
