Navigating ETF Investing Amid AI-Driven Uncertainty
Introduction to ETF Investing
What's the best approach to ETF investing? You need to understand the current market landscape, including the impact of AI on the software sector. Apollo's Sambur warns that software's AI-related challenges will continue, with significant uncertainty about future revenue models. This uncertainty has led to a 20% year-to-date decline in the IGV Software ETF.
As you consider your investment strategy, keep in mind that the SPY and QQQ ETFs have been affected by the software sector's AI-driven selloff. The SPY's 50-day moving average at $585 provides key support, while the QQQ's price-to-earnings ratio of 25 indicates a potential overvaluation.
The Setup
Beyond the current market volatility, it's crucial to recognize the long-term implications of AI on the software sector. David Sambur, Apollo's Co-Head of Private Equity, notes that the worst is yet to come for software stocks due to 'very large unknowns'. Meanwhile, the IGV Software ETF's decline has been accompanied by a 10% drop in AAPL's stock price, highlighting the interconnectedness of the tech sector.
On the flip side, some investors may see this uncertainty as an opportunity to buy into the software sector at a discounted price. However, you should exercise caution and consider the potential risks, including a further decline in the IGV Software ETF and a potential breakdown of the SPY's 50-day moving average.
The Play
To navigate this uncertain environment, you should consider a hedging strategy, such as buying put options on the QQQ ETF. This can help limit your potential losses if the software sector continues to decline. Alternatively, you could allocate 5% of your portfolio to the IGV Software ETF, with a stop-loss order at 10% below your entry price.
A 2% position size in the SPY ETF can also help you manage risk, limiting your maximum loss to $500 on a $25,000 account. Furthermore, you could consider buying call options on AAPL, with a strike price of $150, to potentially profit from a rebound in the tech sector.
- Buy put options on the QQQ ETF with a strike price of $350
- Allocate 5% of your portfolio to the IGV Software ETF
- Set a stop-loss order at 10% below your entry price
Your Action Step
Now that you've considered the implications of AI on the software sector, it's time to take action. Set an alert at $570 for the SPY ETF, and be prepared to buy or sell based on your investment strategy. You should also monitor the price-to-earnings ratio of the QQQ ETF, aiming to buy or sell when it reaches 20 or 30, respectively.
By following these steps and staying informed about the software sector's AI-driven challenges, you can make more informed investment decisions and potentially profit from the uncertainty. Remember to always prioritize risk management and adjust your strategy as the market landscape evolves.
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Last updated: March 2026
By the Investing Strategies Editorial Team
This content is for informational purposes only. Not financial advice—always do your own analysis before making investment decisions.