What is QQQQ?

QQQQ (until December 1, 2004, the symbol was QQQ) is a tracking stock for the NASDAQ 100 index. As of April 2007, the official name is POWERSHARES QQQ, but the trading symbol remains QQQQ.

Technically, QQQQ is a unit investment trust that is designed to follow generally the performance of the NASDAQ 100 Index. QQQQ is also known as an exchange traded fund or "ETF". The NASDAQ 100 Index consists of the largest non-financial stocks that are listed on the NASDAQ stock market.

Although there is no guarantee that QQQQ will exactly match the performance of the NASDAQ 100 Index, in practice its results have been extremely close to that of the index. QQQQ allows you to purchase the performance of the NASDAQ 100 Index through a single transaction.

Currently, QQQQ trades on the NASDAQ Exchange. Before December 2004, QQQQ had the symbol QQQ and traded on the American Stock Exchange.

QQQQ may be bought using margin (with a suitable brokerage account) and may be sold short.

Purchase of QQQQ gives you diversification of your portfolio through the purchase of one stock.

Since QQQQ represents 100 of the largest companies listed on the NASDAQ Index, one purchase automatically diversifies your holdings among 100 different companies.

QQQQ has the advantage of great liquidity.

Its volume of trading is so large that when you trade QQQQ your order is generally filled instantly. You have no problem getting in and out of positions as might occur if you trade stock which have less trading volume and are thinly traded.

For all these reasons, QQQQ is quite suitable for the portion of your portfolio with which you wish to time the market.

The automatic diversification achieved through using QQQQ allows you to concentrate on timing, not stock selection.