Buy These 4 ETFs in 2024 and Never Work Again
Summary
TLDRThis video script discusses the potential of investing in AI funds, highlighting the impressive growth of Nvidia and the broader AI market's expected expansion. The host recommends four AI-focused ETFs for long-term investment, emphasizing diversification and the importance of understanding each fund's strategy. The script also touches on the importance of cybersecurity in the AI era, suggesting the Wisdom Tree Cyber Security Fund as a way to capitalize on the growing need for data protection.
Takeaways
- 📈 Investing in Nvidia 2 years ago could have turned $10,000 into over $100,000, illustrating the potential of AI investments.
- 🌐 The global AI market is expected to grow 12 times in size over the next 8 years, with a CAGR of nearly 37%, significantly outpacing the S&P 500's historical average.
- 💡 The video discusses the best AI funds to invest in for long-term growth without relying on luck, emphasizing diversification and market trends.
- 📊 The S&P 500 and NASDAQ 100 are compared, with the latter offering advantages such as a tech-focused composition and higher historical returns.
- 💼 The NASDAQ 100's performance is attributed to its top holdings, which include major AI and tech companies like Microsoft, Apple, Nvidia, and Google.
- 🛡️ The speaker recommends the VanEck Semiconductor ETF (SMH) for targeted exposure to the chip companies fueling AI advancements, highlighting its past performance and future potential.
- 🔮 The Roundhill Generative AI Technology ETF (CHAT) is introduced as an actively managed fund covering various aspects of generative AI, including platforms, infrastructure, and software.
- 🛡️ With the rise of AI, the cybersecurity market is booming, and the Wisdom Tree Cybersecurity Fund (WCBR) is suggested for capturing growth in cloud security, expected to grow six times faster than the broader cybersecurity market.
- 🔑 The importance of understanding each ETF's stock selection, rebalancing strategy, and management fees is emphasized for building a well-rounded portfolio.
- 👤 The speaker discloses their background in electrical engineering and data science and clarifies that the advice is for educational purposes only, not financial advice.
- 🔒 The video is sponsored by Delete Me, a service that removes personal information from online data brokers, highlighting the importance of data privacy in the age of AI.
Q & A
What was the potential return on investment if someone had invested $10,000 in Nvidia 2 years ago?
-If someone had invested $10,000 in Nvidia 2 years ago, they would have just over $100,000 today, according to the video script.
What is the expected growth rate of the global artificial intelligence market over the next 8 years?
-The global artificial intelligence market is expected to grow 12 times in size over the next 8 years, which is a compound annual growth rate of almost 37%.
Why is the NASDAQ 100 considered a good investment according to the video?
-The NASDAQ 100 is considered a good investment because it has three specific advantages: it is tech-focused, includes non-US companies, and tracks 100 companies, allowing for diversification without sacrificing the potential for significant growth.
What is the role of the Vanek Semiconductor ETF (SMH) in an investment portfolio?
-The Vanek Semiconductor ETF (SMH) provides targeted exposure to the largest chip companies, which are crucial for the development and growth of AI technologies, offering a concentrated investment in this sector.
What are the advantages of the Roundhill Generative AI Technology ETF (CHAT) over other funds?
-CHAT is actively managed, focusing on companies involved in generative AI platforms, infrastructure, and software, and it is not overallocated to software companies beyond the biggest tech giants, providing a balanced approach to capturing AI growth.
How does the Wisdom Tree Cyber Security Fund (WCBR) differentiate itself in the market?
-WCBR focuses on companies with a broad selection of products and services that fit multiple cybersecurity themes, and it includes companies with a compound annual revenue growth rate exceeding 20%, indicating a strong growth potential.
What is the expected compound annual growth rate for the global cybersecurity market over the next 8 years?
-The global cybersecurity market is expected to grow at a compound annual growth rate of 11% over the next 8 years, with the cloud security market expected to grow even faster.
Why is the NASDAQ 100 outperforming the S&P 500 despite having the same top five holdings?
-The NASDAQ 100 outperforms the S&P 500 due to its focus on tech companies, inclusion of non-US companies, and a more concentrated portfolio of 100 companies, which allows for greater growth potential.
What is the significance of the S&P 500's average annual rate of return compared to the NASDAQ 100's performance?
-The S&P 500 has an average annual rate of return of 12.6% over the last 15 years, while the NASDAQ 100 has grown by an average of 19.4% per year over the same period, indicating the NASDAQ 100's higher growth potential.
How does the video script suggest building a diversified AI investment portfolio?
-The script suggests starting with a broad market exposure like the NASDAQ 100, then adding targeted funds like the Vanek Semiconductor ETF (SMH), Roundhill Generative AI Technology ETF (CHAT), and the Wisdom Tree Cyber Security Fund (WCBR) to capture growth in specific AI sectors.
What is the role of the Delete Me service mentioned in the video?
-Delete Me is a subscription service that helps protect personal data privacy by removing personal information from hundreds of online data brokers, providing a detailed privacy report and continuous scanning for new data listings.
Outlines
💰 Investing in AI: Nvidia's Growth and AI Market Potential
The video script begins with an impressive claim about the potential returns on investment in Nvidia, highlighting that a $10,000 investment two years ago could yield over $100,000 today. It emphasizes the rapid growth of the global artificial intelligence market, which is expected to grow at a compound annual growth rate of nearly 37% over the next eight years. The speaker intends to discuss the best AI funds to invest in for long-term gains without relying on luck. The script also outlines the structure of the video, providing a list of funds to be discussed along with timestamps for easy navigation. It includes a disclaimer about the speaker's background and the educational intent of the content, and a brief mention of data privacy concerns and a service called 'Delete Me' that helps protect personal information from online data brokers.
📈 Comparative Analysis of S&P 500 and NASDAQ 100
This paragraph delves into a comparison between the S&P 500 and the NASDAQ 100, two prominent stock market indices. It points out that despite the S&P 500's inclusion of the five largest companies by market capitalization, which have individually performed exceptionally well, the index's overall growth has been moderate. In contrast, the NASDAQ 100, which tracks 100 companies and also includes the top five tech giants, has shown superior performance due to its focus on tech companies poised to benefit from the AI boom. The NASDAQ 100's advantages are attributed to its lack of financial sector companies, inclusion of non-US companies, and its ability to make significant moves due to its smaller number of holdings. The paragraph also discusses the speaker's personal experience with 'Delete Me,' a service that helps remove personal data from online brokers, and offers a promotional discount for the service.
🚀 Targeting AI Markets with ETFs: Semiconductors and Generative AI
The speaker shifts focus to the potential of ETFs in capturing the growth in AI markets. They discuss the importance of understanding the market cycle and use the mobile internet era as a historical case study to predict future trends in AI. The paragraph emphasizes the importance of investing in foundational technologies such as semiconductors, which are crucial for the development of AI applications. The VanEck Semiconductor ETF (SMH) is highlighted as a top choice for exposure to the semiconductor market, with a focus on the largest chip companies listed on US exchanges. The script also introduces the Roundhill Generative AI Technology ETF (CHAT), which actively tracks companies involved in various aspects of generative AI, including platforms, infrastructure, and software. The speaker explains the rationale behind choosing these funds and their potential for high returns due to the expected growth in the AI market.
🛡️ Cybersecurity in the AI Era: Protecting the Digital Landscape
The final paragraph of the script addresses the growing importance of cybersecurity in the context of AI advancements. It discusses the increase in cyber threats and the need for robust security measures as AI technologies become more prevalent. The speaker identifies the global cybersecurity market's potential for significant growth, particularly in cloud security, and introduces the WisdomTree Cybersecurity Fund (WCBR) as a means to invest in this space. The fund's strategy is explained, focusing on companies with a strong presence in various cybersecurity themes and a history of high revenue growth. The speaker also discusses the importance of understanding the fund's methodology and the role of active management in selecting and rebalancing the holdings. The paragraph concludes with a reminder of the importance of considering the entire portfolio when making investment decisions.
Mindmap
Keywords
💡Nvidia
💡Artificial Intelligence (AI)
💡Compound Annual Growth Rate (CAGR)
💡ETFs (Exchange-Traded Funds)
💡Diversification
💡S&P 500
💡NASDAQ 100
💡Semiconductor
💡Cybersecurity
💡Generative AI
💡Investment Portfolio
Highlights
Investing $10,000 in Nvidia 2 years ago could result in over $100,000 today, illustrating the potential of AI investments.
The global AI market is expected to grow 12 times in size over the next 8 years, with a CAGR of almost 37%.
The presenter suggests the best AI funds to buy and hold for long-term wealth accumulation without relying on luck.
The list of AI funds is not random but selected for their ability to provide exposure to top AI stocks while maintaining diversification.
The NASDAQ 100 is favored for its performance, tech focus, inclusion of non-US companies, and its ability to make significant market moves.
The S&P 500's growth is compared to the NASDAQ 100's, showing the latter's superior returns, especially with the inclusion of major AI companies.
Delete Me, the sponsor, offers a subscription service to protect personal data from being sold by online data brokers.
The presenter uses historical data to predict future trends in AI, drawing parallels between the mobile internet era and the upcoming AI boom.
The VanEck Semiconductor ETF (SMH) is recommended for targeted exposure to the chip companies driving AI advancements.
The global AI chip market is projected to grow significantly, offering substantial investment opportunities through funds like SMH.
Roundhill Generative AI Technology ETF (CHAT) focuses on companies involved in various aspects of generative AI, including platforms and infrastructure.
CHAT is actively managed and offers diversification in the rebalancing of AI-related stocks, despite its higher expense ratio.
The Wisdom Tree Cyber Security Fund (WCBR) is highlighted for its focus on the growing cybersecurity market, essential for protecting AI advancements.
WCBR's stock selection strategy and focus on companies with high compound annual revenue growth rates make it an attractive investment.
The importance of considering the overall portfolio when investing in multiple funds is emphasized, rather than evaluating funds in isolation.
The presenter's personal experience with portfolio diversification and the decision to sell part of an Nvidia position is mentioned.
The video concludes with a reminder that the best investment one can make is in oneself, underlining the value of personal growth and education.
Transcripts
if you invested $10,000 in Nvidia 2
years ago you'd have just over $100,000
today you heard that right and things
are just getting started the global
artificial intelligence Market is
expected to 12x in size over the next 8
years which is a compound annual growth
rate of almost
37% that's three times higher than the
S&P 500's average rate of return over
the last 15 years and in this video I'll
go over the best AI funds to buy and
hold forever so that I win no matter
which companies come out on top that's
the best way to get rich without getting
lucky your time is valuable so let's get
right into it first things first I'm not
here to hold you hostage so here are all
four funds I'm going to talk about and
there are time stamps so you can jump
around but let me point out three quick
things before you do first this isn't a
random list of AI funds and stocks like
you see in many other videos I picked
these four funds specifically because of
how they overlook appp to give me more
waiting to the best AI stocks on the
market while still staying Diversified
second this isn't some Beall and endall
list of funds think of it as a solid
foundation for portfolios of all sizes
in 2024 and Beyond and it's fine to add
other ETFs or individual stocks on top
of this list and third I'm not a
financial adviser my background is an
electrical engineering and data science
and I have about 10 years of Industry
experience using AI to solve real world
problems that's why every fund I'll talk
about takes advantage of this massive AI
wave and I'm sharing my research for
educational purposes only all right with
all that out of the way let's dive into
the first fund the advice I always hear
is to put some money into the market
every month which usually means buying a
fund that tracks the S&P 500 the S&P 500
is a basket of the 500 largest US public
companies and the bigger the company the
bigger it stocks position in the basket
but 5 companies is a lot so the S&P 500
grows slow and steady even when its
biggest Holdings go on massive runs for
example the top five companies in the
S&P 500 are Microsoft Apple Nvidia
Google's Class A and Class C shares
combined and Amazon besides Apple all of
these companies have been crushing it
all year Microsoft is up by 20% so far
Google is up a whopping 32% so far this
year Amazon is up more than 50 1% in the
last 6 months and Nvidia which is the
stock I've covered non-stop over the
last 3 years is up by an insane 156%
this year alone but even though all of
these massive Market winners sit at the
very top of the S&P 500 the fund is only
up by 15% so far this year and just to
be clear 15% is an amazing six-month
return especially when you factor in how
safe and diversified the S&P 500
actually is but that's also way above
above its average annual rate of return
of 12.6% over the last 15 years on the
other hand the NASDAQ 100 grew by an
average of 19.4% per year over that same
time frame or roughly 50% more per year
than the S&P and even though the S&P
grew by 26% in 2023 the NASDAQ
absolutely crushed it growing by 54%
over the same time frame that's more
than twice the returns during one of the
best years in stock market history now
here's the thing the top five Holdings
in the NASDAQ are exactly the same as
the S&P Microsoft Apple Nvidia Google's
Class A and Class C shares combined and
Amazon yet the NASDAQ 100 has
outperformed the S&P 500 in 12 of the
last 15 years that's because it has
three specific advantages in my opinion
first it doesn't hold companies from the
financial sector like Banks as a result
it's fil with more Tech focused
companies that are positioned to benefit
from this huge AI boom second the NASDAQ
holds non us companies like asml which
is a netherlands-based company that
makes the massive lithography machines
that companies like Intel Samsung and
tsmc used to make the most advanced
chips on Earth and third it tracks 100
companies instead of 500 100 is still a
lot of diversification but not so much
that the NASDAQ can't make big moves
making it a great fund to get get rich
without getting lucky or sacrificing too
much security along the way and speaking
of security I recently found out that
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getting more spam phone calls texts or
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while the NASDAQ is a great Foundation
of 100 tech companies the rest of these
funds are much more targeted so the the
obvious question is how can we pick the
right target markets so early into this
new aib based technology cycle well we
can look at an awesome case study on the
cycle that we just went through this is
a chart from Morgan Stanley that looks
at how different kinds of stocks
performed during the rise of the mobile
internet I've shown this chart in
previous videos but you know what they
say history doesn't repeat itself but it
often Rhymes and I really think that
this case study could help identify the
kinds of companies that will win big in
this new era of generative AI the first
big takeaway is that the mobile internet
evolved over a very long time for
example this chart starts in 2010 but
the first iPhone actually came out in
2007 and Apple's App Store started in
2008 it took three years for the iPhone
to disrupt Blackberry reach Mass market
adoption and change the way that
businesses and consumers think about
mobile Computing likewise this chart
ends in 2016 but 5G didn't even start
rolling out until 2018 and tons of new
mobile first online only apps and
services launched during the lockdowns
of 2020 and 2021 so even though we've
all heard about generative AI by now I
still think we're in the Blackberry era
of what could be a decade long tech
cycle so there's no need to rush into
any specific investment and while high
margin software and service companies
usually make for the highest performing
stocks over the long term they're
actually the last part of any Tech stack
to to make money since they all run in
data centers or on devices at the edge
like smartphones and tablets laptops and
desktops and soon self-driving cars and
humanoid robots and before the
infrastructure and devices powering
these software platforms can make big
moves of their own semiconductor
companies need to build the chips that
power them so instead of trying to
predict the biggest AI winners a decade
from now some of which may not even
exist yet I can get broad exposure to
these three key AI markets
semiconductors Hardware infrastructure
and software that's exactly what these
next three funds are targeting and how
they all fit together my top choice for
semiconductors is the Vanek
semiconductor ETF ticker symbol SMH
which tracks the largest chip companies
listed on major US exchanges I really
like this ETF for a few key reasons
first it only tracks 25 companies so
this is a very targeted fund the top
five companies are Nvidia one
semiconductor broadcom AMD and asml all
stocks which I cover very often on this
channel and they make up about 51% of
this fund with Nvidia having around a
20% waiting all on its own that's quite
concentrated which is why I started with
the NASDAQ 100 and I'm using SMH to get
even more exposure to semiconductors on
top of that and just like the NASDAQ SMH
is passively managed which means it has
a fairly low expense ratio of just
0.35% per year but the fund itself has
returned around 54% year-to date around
70% over the last one year and a
whopping
370% over the last 5 years in fact this
fund has a long history of high
performance if you invested $110,000
into SMH when it was created at the end
of 2011 you'd have over
$200,000 today and the next few years
look just as good for semiconductors
since the global AI chip Market is
expected to more than 11x in size over
the next 9 years which works out to a
compound annual growth rate of over 31%
through 2033 that makes SMH a great way
to capture that growth and get rich
without getting lucky remember huge
growth happens when existing companies
already have the perfect platforms for
new or quickly growing markets in this
case semiconductor companies are
building chips to train and power large
multi modal models and AI agents like
open ai's GPT 40 anthropics Claude 3.5
Sonet and Google's Project Astra which
is built on top of Gemini while new chip
competitors are still ramping up that's
why this fund has outperformed most
individual stocks on the market
investors need to understand that these
foundational models are just as much the
infrastructure for the next generation
of aib based software applications as
the physical Hardware that they run on
which is why the next fund on my list is
Round Hills generative AI technology ETF
ticker symbol CH h a which tracks a
little over 50 companies actively
involved in four different areas of
generative AI platforms are the
companies developing training and
commercializing AI tools that
third-party developers can use to build
their own applications products and
services infrastructure companies
provide the it hardware and the chips
for generative AI workflows like we just
discussed and enter and consumer
software companies are building
generative AI applications for other
businesses and direct to Consumers
respectively that's why companies like
Nvidia Microsoft Google and meta
platforms sit at the top of this fund
all of them have giant ecosystems filled
with services and applications for end
users as well as software and Hardware
infrastructure for other companies to
build on top of one thing I really like
about this particular ETF is that it's
not overallocated to software companies
beyond the biggest Tech Giants AI
software startups have been dropping
like flies as GPT Claude Gemini and
llama keep getting more capable and they
end up cannibalizing businesses that add
simple features like tutoring or
translation my guess is that the next
Microsoft or Google or Facebook hasn't
been created yet and it's a little too
early to find the winners and losers at
the very top of the AI stack chat comes
with a
0.75% annual fee making it the most
expensive ETF on my list list but unlike
the previous two funds chat is actively
managed which also means it diversifies
the way that our stocks get rebalanced
this fund first launched in May of 2023
which also makes it the youngest ETF on
this list but it's returned around 40%
since Inception and 23% year-to date and
like I said at the start the global
artificial intelligence Market is
expected to 12x in size over the next 8
years which is a compound annual growth
rate of almost
37% split between Hardware software and
services which makes chat a great ETF to
consider for capturing all that growth
but there is one software Market that is
already benefiting from this AI boom
right now which is where the fourth fund
on my list comes in so if you feel I've
earned it consider hitting the like
button and subscribing to the channel
that really helps me out and it lets me
know to put out more content like this
thanks and with that out of the way
let's talk about the fourth fund on my
list since the launch of chat GPT
there's been a 12-fold increase in
fishing attempts because emails texts
and even videos can be generated with
the push of a button there's been a 75%
increase in data theft and extortion and
AI has even enabled build your own
ransomware subscriptions that cost next
to nothing compared to the damage that
they can cause this is why as much as
every company is investing in AI right
now there's one part of their budgets
they will never cut and that's cyber
security the global cyber security
Market is expected to more than double
over the next 8 years which would be a
compound annual growth rate of 11% but
the global Cloud security Market is
expected to 6X over that same time frame
which means it should grow around twice
as fast I'm showing you multiple charts
here because cyber security is many
different things just like artificial
intelligence is actually many different
things for example access management and
auth authentication is about ensuring
that only the right people can move
around a given Network identity
protection is about protecting an
individual's information from getting
stolen that's where delete me fits in
but for your personal data on the open
web instead of a company's servers
endpoint protection is about securing
laptops tablets and phones but not
necessarily their users and as
generative AI keeps evolving I think
that every single one of these
individual cyber security markets will
grow even faster than people predict
since there will be new kinds of devices
apps and data that need to be secured
new kinds of hacking techniques and
malware new rules and regulations for
what data security even is and probably
just way more cyber threats in general
so to capture that growth I picked the
Wisdom Tree cyber security Fund ticker
symbol
wcbr because I really like their stock
picking strategy the top 10 Holdings
inside wcbr make up over half of the
fund and it includes companies like
hashicorp paloalto networks crowd strike
data dog zscaler and tenable looking at
this fund's documentation which I always
recommend reading I can see that wcbr
holds 25 companies at a time 20 of which
have a broad selection of products and
services that fit at least three of the
eight cyber security themes that this
fund focuses on and 17 of the companies
in this fund have a compound annual
revenue growth rate exceeding 20% I can
even see a broad snapshot of why
specific compan companies were chosen
and given higher weights inside the fund
the reason I care so much about
understanding the methodology for
managing this fund is because I'm not a
cyber security expert myself so I see W
cbr's
0.45% expense ratio as the price to
offload the cyber security research and
rebalancing to the Specialists advising
this fund which further diversifies this
four fund portfolio in terms of stock
selection and management all right I
know this video is a little long but I
wanted to be thorough since ETFs take
some careful consideration the stock
selection rebalancing strategy and
management fees for each ETF the number
of Holdings and their weights and how
each fund's Holdings overlap are all
important especially if you're making
multiple funds work together you need to
think of your portfolio as a whole not
just evaluate each fund individually
speaking of which you probably noticed
that the first three funds all hold a
lot of Nvidia stock even though they
target very different markets as a
result Nvidia ended up being over 60% of
my personal portfolio until just a few
weeks ago so if you want to know why I
ended up selling a solid chunk of my
position and how the rest of my socks
are doing check out this video next or
if you want to see my top 10 stocks to
get rich without getting lucky then this
video is for you either way thanks for
watching and until next time this is
ticker symbol U my name is Alex
reminding you that the best investment
you can make is in you
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