1 Unstoppable ETF I'm Buying Hand Over Fist During the Next Bear Market

Bear markets can be daunting, watching investments dwindle steadily. While we're not in one yet, experts predict one may be on the horizon, given the S&P 500's historically high valuation of 40.89, the highest since the dot-com era. Warren Buffett, the renowned investor, once advised that bear markets are prime buying opportunities, suggesting a shift in perspective: "Disinvestors lose as market falls, but investors gain."

The VanEck Semiconductor ETF (SMH -6.98%) is an ETF I'm considering purchasing during the upcoming downturn. Defined by a 20% (or greater) market decline, a 20% drop from the current S&P 500 high of 7,818 would place the index around 6,200. Such an event would reset many AI-driven stocks, positioning them for future growth as AI continues to advance.

The ETF, which tracks the MVIS US Listed Semiconductor 25 Index, boasts a top three holding of Nvidia, Taiwan Semiconductor Manufacturing, and Advanced Micro Devices. With a nearly 28% average annualized return, it has outperformed other tech ETFs since its inception in 2011. However, its concentrated nature warrants holding it within a diversified portfolio.

Additionally, incorporating ETFs for bear market protection and core holdings would provide balance. While the VanEck Semiconductor ETF experiences significant short-term volatility, its long-term growth potential makes it an attractive choice for investors looking to capitalize on the impending AI boom. Nonetheless, due to its aggressive growth profile, it should constitute a modest portion of the overall investment portfolio.