5. Why It Must Be the NASDAQ-100

5. Why It Must Be the NASDAQ-100

A wrong direction can never reach the destination.

Right Instrument + Right Market = The Two Variables of Investing

Let me compress this to the bone: investing is two variables.

• Right instrument: broad-based, market-cap-weighted, passive — an index fund.
• Right market: which country’s index you buy. 99% of retail investors lose on the second one. They hear the phrase “buy index funds” and run off to buy VT, “global emerging-market fund,” “Vietnam fund,” “Europe fund” — thinking diversifying across the globe means diversifying risk. It doesn’t. Diversifying into the wrong markets is dragging your return downward. This section deals with point two: “why it has to be the U.S. NASDAQ-100,” not “any broad-based fund outside the U.S. is fine.”

Right Market: The Locomotive and the Cars

Imagine the global economy as a train.

• Locomotive = the United States: brand, design, product innovation, ecosystem platforms. This is the highest value-add, the segment with the fattest gross and net margins.

• First car = Taiwan, Korea: manufacturing and export, riding in the locomotive’s wake — selling national labor, consuming the country’s environment, shipping finished goods to the U.S.

• Second car = China: primarily manufacturing, with partial self-sufficiency, but still anchored by demand and standards set in the U.S.

• Tail = the third world (Brazil, South Africa, Australia, Canada, New Zealand): providers of raw materials, minerals, energy — the lowest value-add segment.

• Europe: was once a locomotive, but in the 2020s has essentially exited the AI mainline and is gradually sliding toward third-world rails. The physical common sense of this train: the tail cannot outpace the locomotive long- term. The moment the tail goes faster than the front, the train derails. Likewise in the global economy: Taiwan-Korea-China manufacturing speed cannot outpace U.S. brand and innovation speed long-term; third-world raw-material prices cannot outpace U.S. service prices long-term. This is structural, not cyclical. So investing means betting on the locomotive — not on the cars, and certainly not on the tail. This is the fundamental reason CLEC opposes everything other than QQQ / SPY among “globally diversified” products: spreading money from the locomotive into the mid-cars and tail is, in name, “diversifying risk,” but in substance dilutes your future wealth.

Right Instrument: Broad-Based, Cap-Weighted, Passive

With “market = U.S.” settled, the next step is “instrument = NASDAQ-100.” It tracks the largest 100 non-financial companies listed on the NASDAQ exchange — Apple, Microsoft, Google, Amazon, Nvidia, Tesla, Meta… names that are practically synonymous with contemporary technological civilization. When you buy a NASDAQ-100 index fund, you are not buying the fate of any one company; you are buying the overall trajectory of human technological progress. More importantly, the index has a crucial property: automatic culling of the weak, retention of the strong. These hundred companies are not permanent. The moment a company loses competitiveness and its market cap drops out of the top 100, it is automatically removed and replaced by a stronger newcomer. The NASDAQ-100 of twenty years ago looks very different from today’s — Yahoo, Sun Microsystems, Lucent Technologies were once giants long since dropped; they have been replaced by names like Nvidia and Broadcom. You do not have to judge which company has a future and which will decline; the construction rules of the index do that for you. It is like an all-star team made forever of the strongest players — as some age and decline, they are immediately replaced by younger and stronger newcomers. All you have to do is hold the “shares” of this all-star team, and it will always remain the strongest competitor.

QQQ vs. SPY vs. VT: Differences Measured in “Multiples”

Let me put three representative ETFs side by side on the iPad quote app:

Read this table this way:

• SPY returns half of QQQ. Same money, same time: QQQ rolls to 10×, SPY rolls to 5× — you make half as much.
• VT returns a quarter of the U.S. (SPY). Put the whole world in to “diversify,” and the curve gets dragged down — you mix the mid-cars’ and tail’s slow speed into the locomotive’s high speed; average it out, and that is the result.
• In one sentence: investing in SPY makes you half as rich. Investing in VT makes you outright poor.

Buffett’s “Buy SPY” Line Doesn’t Map to You

You may have heard Buffett publicly say, “If you don’t understand investing, just buy the S&P 500 index fund and hold long-term.” This is often dragged out as the argument for “why you shouldn’t fixate on QQQ.” Let me set this straight — Buffett said that line in the context of ordinary American families who don’t understand finance at all and want the lowest-friction, stable allocation. He himself is in his nineties; from his remaining time horizon, SPY’s return is enough for him to use and enough for his estate planning. But you are not him. You still have 30, 50, possibly 60 years. Over a window like yours, SPY’s annualized half-of-QQQ becomes tens of multiples of wealth difference long-term. Whether Buffett ends up poor or not is not your problem — but you cannot afford to follow him into poverty, because you do not have his time horizon to recover. Discover at year 50 that SPY wasn’t enough, and you have no time left to start over. Don’t drag advice from investment idols straight onto your own life. Ask yourself: how long is my time horizon? If the answer is “over 20 years,” then SPY should not be your core position. QQQ should be.

QQQ’s Top 10 Holdings in 2026: All AI Chain

Crack open QQQ and its top 10 holdings by market cap (as of May 2026) look like this:

The top 10 alone account for roughly 46% of QQQ’s market cap. And the top 9 are almost uniformly core players on the AI chain — buy a single share of QQQ and you directly hold “every top company in the world doing AI.” This carries huge weight in the context of the “AI paradigm shift” we discussed earlier: you are not buying some industry, some company, or some country — you are buying the AI thing itself. Many people will ask: “Then shouldn’t I just buy the Mag 7, or some ‘7+’ ETF for higher concentration and higher return?” No. Two reasons:

• Too much volatility: the fewer constituents, the greater the damage one piece of bad news for a single company does to your account. 100+ to 7+ multiplies your volatility several times.
• You don’t know which one will be kicked out: today’s top 7 may not be the top 7 in five years. Costco was in QQQ’s top 10 a few years ago and has dropped out; Walmart is in QQQ’s top 10 despite not being on the AI chain — on scale, not on track. The index automatically culls the weak and retains the strong; your hand- picked “7+” basket does not. If you’re going to pick, pick 100+ (QQQ / 00662) and let the index itself do the culling.

QQQ’s 26-Year Return as of May 2026

Let me open the iPad quote app and put the data right in front of you. QQQ launched on March 1, 1999, with an issue price of roughly $50–53. By May 2026, QQQ trades at about $672. From 53 to 672 is about 12× in 26 years — 12 raised to the 1/26 power gives an annualized of about 10%. This is an extremely “standard” return rate: basically consistent with the long-term annualized return of the stock market in history, and consistent with the geometric average we computed from the 200-year hard evidence. But pay particular attention to the stretch from 2000 to 2015 — QQQ peaked during the 2000 dot-com bubble, then crashed roughly 85%; the 2008 global financial crisis hit again. If you happened to invest a large lump at that 2000 peak, you would have had to wait until around 2015 to see your account finally break even — a full 15 years underwater. This is

not scaremongering; it is fact written into the historical curve. The next section, Simulating the Worst Case, deals with this specifically — for now, we leave the tail dangling.

A Small Exception for 0050

This edition for the first time explicitly enters “a small position in 0050” onto the recommended list. The reasons need to be spelled out:

• Taiwan’s 0050 is not a NASDAQ-100 equivalent — it is a mix of Taiwanese local technology + financials + traditional. It does not natively belong to “locomotive” instruments.
• However, during the 2024–2026 wave of AI supply-chain prosperity, Taiwan happens to sit on the most critical hardware links (TSMC, Quanta, Hon Hai, etc.), making it the “first car” trailing the locomotive. Short-term, 0050’s performance can keep up.
• So a small allocation (not exceeding an auxiliary proportion of your core position) is acceptable — provided that it never replaces your core QQQ / 00662.
• Once the AI cycle turns (there’s likely a 10–20-year window of AI capex left, but no one can predict exactly when the turn comes), 0050 will return to the native speed of Taiwan’s local mixed index — not the locomotive, but a mid-car. If you already hold 0050 and ask “should I rotate to 00662” — that depends on your time horizon and current weighting. If you are young and have time on your side, rotating part to 00662 / QQQ to build the core position, and keeping a small slice of 0050 to ride the AI tailwind, is a reasonable transition plan.

Closing: The Key to Capitalist Wealth

We choose the NASDAQ-100 not because it has risen the most, but because it represents the direction of human development. Technology is the engine driving civilizational progress — true for the past two centuries, and only more true for the next two. The whole philosophy can be summed up in one sentence: The key to capitalist wealth — long-term investment in the U.S. NASDAQ-100 index fund. Buy when you have money, hold long-term, hold to death. Same logic as a landlord never selling his land. The employees and CEOs of these 100 companies are working for you, the capitalist — Elon Musk, Tim Cook, Jensen Huang — they research, manufacture, and earn money for you. You, the landlord, only have to do one thing: never sell the land.

Key Points

One, two variables in investing: right instrument (broad-based, cap-weighted, passive index fund) + right market (the U.S., because the U.S. is the locomotive of the global

supply chain). 99% of retail investors lose on the second; they get dragged down by all the “global diversification” and “emerging market” repackaging. Two, QQQ’s long-term annualized is ~10% (~21% over the last decade), SPY ~9.4%, VT lower — when QQQ rises 10×, SPY rises 5×, VT only 2.5×. SPY makes you half as rich. VT makes you outright poor. Buffett’s recommendation of SPY was meant for someone with his time horizon — don’t drag it over to yours. Three, in 2026 the top 10 in QQQ make up 46% of the index, all AI-chain core players — buying QQQ = buying “the AI thing itself.” Do not buy Mag 7, do not buy 7+ / 50+; pick 100+. A small allocation to 0050 is acceptable as auxiliary because Taiwan sits on the AI supply chain, but never replace the core QQQ / 00662 with it.

Source Illustrations