SPY, TQQQ, and the Evolution of the Stars Model

SPY is the foundation of the Stars model—the base position to which TQQQ is added. There’s a reason for that: 85% of investors and financial advisors can’t beat SPY.

But balance matters.

In the Stars model, TQQQ is capped at 40% of the portfolio to manage drawdowns. During market corrections, the TQQQ allocation can temporarily rise to 60%—but only when its price has dropped at least 40% from the prior year’s close.

SPY acts as a space holder until something better comes along. The best current alternative? Bitcoin.

In the Bitcoin variation of the Stars model, profits from TQQQ are gradually used to purchase Bitcoin, reaching a maximum allocation of 40% over about three years.

I’m also developing two new models designed to outperform SPY—and I welcome ideas from others. The only rule is simple: your strategy has to beat SPY.

Stars is already one of the best long-term buy-and-hold strategies available. Replacing SPY with a stronger holding makes it even better.