Semiconductor stock prices fell significantly today. With the recalibration of employment figures, March employment increased to 214,000 and April employment to 179,000, indicating that the economy is performing very well.
Table of Contents
As employment increased, it can be confirmed that the employment index rose due to an increase in construction workers in the electrical and plumbing sectors related to the construction of U.S. data centers.
Disclaimer
All investment decisions and any profits or losses arising from such investments are the sole responsibility of the investor. This article is written for personal study purposes, and I am a layperson, not an investment expert.
Responsibility for all investment judgments and decisions rests solely with the investor. I emphasize once again that any profits or losses resulting from the investor’s own judgment are the sole responsibility of the investor.
U.S. Treasury Yields Surpass 4.5%
With news of improving employment, the yield on U.S. 10-year Treasury bonds has already surpassed 4.5%. With semiconductor stocks falling after the projected revenue growth rate announced by Broadcom’s CEO the previous day fell short of market expectations, U.S. Treasury yields are rising as concerns about inflation intensify following reports of a very strong economy.
Should I buy semiconductor ETFs now?
Recently, I have been researching a strategy to add to my existing rebalancing logic: if QLD’s stock price falls below the 20-day moving average, I buy 10% of my total cash holdings; if it falls below the 60-day moving average, I buy another 10%; and if it breaks below the 120-day and 180-day moving averages, I buy 10% of each.
Ultimately, if QLD’s stock price falls below the 200-day moving average, the strategy involves using all remaining cash—which amounts to 50% of my total cash holdings—to fully invest in QLD.
Using this method, if the Nasdaq index falls by 80%—similar to the collapse of the IT bubble in 2000—my assets would drop by 90%. Even if you make regular purchases on the 1st of every month, a 1x Nasdaq index product recovers its principal in 3 years and 6 months; however, if you purchase QLD, a 2x leverage product, it takes more than twice as long—over 7 years—to recover the principal.
Whether it is a 2x leverage ETF or TQQQ, a 3x Nasdaq index leverage ETF, the rate at which investment capital dwindles in a bear market is so rapid that it is extremely difficult for individual investors to minimize losses.
Therefore, if the Nasdaq index falls by -2.5%, I mechanically sell a certain percentage of my holdings in U.S. stock ETFs (excluding bonds and gold), Korean national index ETFs, China index tracking ETFs, Japan index tracking ETFs, and India index tracking ETFs. Rebalancing Method
As the Nasdaq fell by more than -5%, I executed a rebalancing plan according to my usual manual.
How to Set Selling Weights
When the Nasdaq dropped by -3%, I followed the Jordan Rule and sold 10% of my holdings for every -2.5% decline in top-performing Nasdaq stocks, QQQ, and index-tracking stock ETFs.
For example, if I held 100 shares of a top-performing Nasdaq stock and 100 shares of QQQ, I sold 20 shares of Nvidia (the top Nasdaq stock), representing 20% of my holdings, and 20 shares of QQQ, representing 20% of my holdings.
How to Buy During Rebalancing
I set up automatic fractional buy orders using the cash generated from selling Nvidia and QQQ, matching them to the portfolio weights below. Rebalancing Portfolio
VTI : 20
MAGS : 5
QQQ : 10
VXUS : 20
SGOV : 10
BND : 20
IAUM : 15
Is rebalancing the best approach?
Micron’s P/E ratio is 10, leaving significant potential for further growth, and Samsung Electronics and SK Hynix are also expected to rise more over time.
As AI data centers are constructed, the demand for AI memory and AI semiconductors will increase. I am well aware that holding semiconductor theme ETFs until the end, following a trend-following strategy, can yield substantial profits.
In fact, I should have bought all of MAGS instead of Nvidia, but I held Nvidia as part of my portfolio, trusting statistics that top NASDAQ stocks rise by an average of 25%.
However, as a middle-aged pension investor, the retirement fund I manage is not solely for my own benefit; it must become a source of wealth that allows my family to receive and use living expenses even 20 to 30 years from now.
I must provide for my elderly parents’ medical and nursing home expenses, as well as pay for my growing children’s private academy fees and university tuition. Of course, I also have to cover the living expenses necessary for the whole family to eat and pay off the interest and principal on the mortgage to buy a home.
The weight of life that I must shoulder as the head of the household is not easy.
What should I do to sleep soundly at night with my legs stretched out?
As of now, I do not know of any method other than asset allocation investing. I have seen many videos from young YouTubers in their 30s and 40s showing off how they invested 100 million won in QLD and made 1.5 billion won in five years by aggressively pouring cash in whenever the stock price showed a temporary correction.
As an unmarried young office worker in my 30s, if I have over 20 years left to receive a salary, I would like to try following their example. For middle-aged pension investors with fewer than 10 years left in their careers, there is no choice but to follow a pension portfolio asset allocation strategy that offers low volatility and can consistently generate an annual average return of around 8%, rather than seeking higher returns.
Now that stress causes headaches and frozen shoulder, it has become more important to get at least 7 hours of deep sleep at night without any worries, rather than risking health by overextending oneself with investments.
It is said that if you feel excitement or a sense of thrill while investing, you are already participating in speculation. When dopamine is excessively secreted in the brain, one becomes addicted to it and continues to repeat the behavior. The problem is that one cannot stop after just one action and moves on to 3x leverage TQQQ or 10x leverage Bitcoin long/short futures to taste even greater dopamine.
You must become self-aware and avoid falling into dopamine-fueled speculative addiction to live the rest of your life happily.
Backtesting Stock Price Downside Defense Due to SpaceX IPO, OPENAI IPO, and Anthropic IPO
As soon as SpaceX completes its IPO and lists on the Nasdaq market, a stock with a market capitalization larger than Samsung Electronics will emerge. It is anticipated that funds invested in other Nasdaq and S&P 500 stocks will simultaneously sell those stocks and switch to SpaceX, causing a significant decline in the S&P 500 and Nasdaq indices.
We conducted a backtest by noting that the Nasdaq fell 5.4% the day after Broadcom’s stock price dropped 12%.
We assumed that the U.S. stock market index would fall by 5.5% with each IPO.
VTI, QQQ, and MAGS within the current portfolio are expected to decline significantly. VXUS is unlikely to be significantly affected as it holds global stocks excluding the U.S.
Backtesting Method
We utilize the past 30 years of data. It is assumed that the inflation rate rises by 3.47% per year. Accumulate $1,000 on the 1st of every month for 30 years according to the portfolio ratios below.
Rebalancing is performed on June 1st and December 1st. In other words, rebalancing occurs twice a year.
The portfolio weights are as follows:
VTI : 20
MAGS : 5
QQQ : 10
VXUS : 20
SGOV : 10
BND : 20
IAUM : 15
Dividends paid by VTI, MAGS, QQQ, SGOV, and BND are reinvested on the 1st of every month.
I have plotted the annual returns, standard deviation of returns, and maximum drawdown (MDD) of the portfolio invested via monthly installments over 30 years on an annual basis.
Synthesis method for data where 30-year-old data does not exist
MAGS was created in 2023, so data from 1996, which is 30 years ago, is unavailable. Therefore, MAGS prices were generated by calculating the average stock prices of the 7 companies by market capitalization for each year, including 1996. Similarly, for IAUM and BND, if historical data is unavailable, price data was generated by modeling relevant indices.
In the backtest, if SpaceX lists on June 12, 2026, MAGS and QQQ fall by 5.5%. VTI also falls by 4%. Rebalancing is performed according to portfolio proportions on June 13, 2026. If OPENAI lists on October 1, 2026, QQQ falls by 5.5%, MAGS falls by 5.5%, and VTI falls by 4% based on that point in time. Rebalancing is performed according to portfolio proportions on October 2. On December 1, ANTHROPIC lists, causing the Nasdaq to fall by 5.5%, resulting in QQQ falling by 5.5%, MAGS falling by 5.5%, and VTI falling by 4%. Rebalancing is performed on December 2.
Considering this situation, we conducted a backtest again until December 30th and plotted the return graph, return standard deviation graph, MDD graph, annual return table, return standard deviation annual table, and maximum drawdown MDD annual table.
Global Macro & Retirement Portfolio Optimization Strategy
You can get the deep insights on making retirement optimal portfolio.
By utilizing HBD staking within the real-world asset ecosystem, you can secure a stable annual return of 15% while keeping the maximum drawdown (MDD) tightly controlled between -6.5% and -6.9%. https://bomspring.com/clarity-act-hive-hbd/
Applying the structural fix strategy allows you to generate an excellent annual return of 24% while strictly capping the sector risk MDD at 30% during equity corrections.
https://bomspring.com/strl-fix/
This asset allocation approach balances tech ETFs and defensive assets to achieve a long-term compound annual growth rate of 7% to 9% while dampening the MDD to 15%~25%.
This guide demonstrates how to properly allocate AI and infrastructure ETFs on the IBKR platform to target a 10% annual return while restricting the overall MDD to 15%.
https://bomspring.com/ibkr-how-to-buy-korean-stock-etf/
This retirement portfolio management method focuses on limiting the maximum drawdown (MDD) to exactly -15% while steadily achieving an expected return of 10% to 15% annually.
https://bomspring.com/how-to-limit-max-draw-down-mdd-15-for-retirement-portfolio/
In Conclusion
There has been an increasing number of requests to make the many backtesting methods I have researched available for direct use. I am currently exploring ways to provide the backtesting programs I have developed.
Soon, I will provide a method that allows you to run Python code directly on your personal PC or use the Chrome browser to simulate how much your assets will grow over 30 years and the maximum potential decline in your pension assets by specifying your investment stocks and monthly rebalancing dates, and reinvesting your dividends. I am working hard to prepare this, so please look forward to it.
In the next post, I will cover in detail the investment methods learned from Berkshire Hathaway.