Think Traders, Think!

C2
1

When searching for a trading system or investment method, common sense is your greatest ally. To illustrate, let’s examine the performance of two popular ETFs, Invesco QQQ (QQQ) and SPDR S&P 500 (SPY), over the last 10 years, and a 50-50 portfolio combining them. Their historical data provides a clear benchmark for evaluating any strategy.

Over the past decade (ending July 1, 2025), QQQ, which tracks the NASDAQ-100 Index, delivered a compound annual growth rate (CAGR) of 18.61%. However, it experienced a maximum drawdown of 35.12%, reflecting its higher volatility due to its tech-heavy composition. In contrast, SPY, which mirrors the S&P 500, achieved a CAGR of 13.51% with a maximum drawdown of 33.72%, offering a more stable but lower return profile. A 50-50 portfolio of QQQ and SPY, rebalanced periodically, yielded a CAGR of 16.13% and a maximum drawdown of 34.42%, striking a balance between growth and risk.

These figures set a straightforward standard. Whether you’re a short-term trader, mid-term swing trader, or long-term investor, ask yourself: can your method consistently outperform these simple, passive investments? QQQ and SPY require minimal effort—just buy and hold. If your complex strategy, with its indicators, algorithms, or frequent trades, fails to surpass their returns or exposes you to greater drawdowns, it’s time to pause and reflect.

Common sense demands simplicity and effectiveness. If you can’t beat a basic ETF portfolio, question your approach. Are you overcomplicating things? Are you taking unnecessary risks? Use these benchmarks as a reality check to ensure your trading or investing method aligns with practical, achievable goals.

2

. The time it takes to reach a new all-time high is far too long for me.
The NASDAQ 100, for example, took more than 15 years after the year 2000 to reach a new all-time high. What do you do if you need the money during that time? Unemployment, illness, living expenses, alternative and possibly better investment opportunities, etc.

And we haven’t even mentioned the Japanese market in the 1980s…

This number needs to come down!
My personal goal: maximum 3 years to reach a new all-time high.

2. The maximum drawdown is also far too high.
Why shouldn’t something like the Great Depression or the dot-com bubble happen again? Looking back just 10 years is way too short! After the crash in 2000, the NASDAQ 100 lost about 80%!

Sure, you could reduce that number with dollar-cost averaging by continuing to buy during the crash. But the real question is—who can actually do that?
At -20%, some people might still have spare cash to invest. But when it’s down more than -50%, the situation looks very different. There’s a reason the market crashes that hard—so why would you, of all people, still be liquid then?

This number also needs to come down!
My personal target (without leverage): maximum -20%!

3

I hear your drive to make smart, strategic investment decisions that reflect your unique goals. While buying and holding an index can be a solid choice for some, it’s not the only path—especially for those of us who thrive on active trading. As a trader myself, I’m passionate about beating market benchmarks and share my own strategy on C2 to pursue that edge. What I want to highlight is the importance of ensuring any paid trading service or manager delivers value. If their returns don’t at least match a basic buy-and-hold approach, and they don’t align with your risk tolerance, it’s hard to see the justification—especially when metrics like drawdown play such a vital role in protecting your portfolio’s long-term health.

4

There is a lot of ideas of the singularity and the exponential increase in microprocessors.

Just seems that bullish and Nasdaq will go hand and hand in our lifetime.

1 Like
5

I am not going to disagree with you.

1 Like