Why We Recommend Investing in the Nasdaq-100 Index Fund Instead of the S&P 500

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Here is the simple answer: the S&P 500 includes 500 US companies. That is too many companies, and many are in traditional industries, airlines, and banks, which are low-growth, outdated businesses that we should not invest in.

There are more than 4,000 listed companies in the United States, but only about 4% are profitable. That is roughly 160 profitable companies. Since the S&P 500 includes more than 500 companies, investing in SPY means more than half of the index may consist of companies without profits. Why include weaker companies in your index fund?

We invest in the Nasdaq 100 index fund because we believe in humanity, the United States, and technology.

Human progress depends on technology. Should it depend on traditional industries instead?

The United States is the most innovative country in the world. Among the top high-tech companies, apart from TSMC as a manufacturer, the rest are mostly innovative US companies.

US financial regulation is relatively fair, open, and transparent. Compared with many other countries, corporate tunneling and messy governance are less common. The US spirit of contracts and fiduciary duty aims to maximize shareholder returns. Europe gives labor welfare and worker rights higher priority than shareholder rights, followed by government tax revenue and regulation, with shareholder rights last. In other emerging markets, regulation is weak, tunneling is serious, and insider trading is common. These are not good investments.

Humanity has continued to grow for thousands of years and has never stopped growing. We therefore believe the market will keep rising over time: there is no ultimate high, only higher levels. So we buy the Nasdaq 100 index fund and never sell.