Big tech has seen strong gains in 2023 and has outpaced most other sectors. In doing so, the S&P 500 has also performed well, but when you take away a handful of tech companies like Apple, Microsoft, Amazon, Meta and others, the S&P 500 is only up 2%. This is a great reminder of why overconcentration can hurt a portfolio.
Being overweight in this tech position feels great when the market is doing really well because returns will be strong, but once we get a little turmoil and volatility, portfolios in that sector of the market really go down at that time. We’re going to unpack this topic with Laura Stover, RFC® and Michael Wallin, CFP® on today’s show and provide some context to this idea of stock market concentration.
This will dovetail right into a discussion on true diversification because when you have your portfolio segmented appropriately, one down year won’t determine the overall success of your investments. We’ll take you through our process and break down the strategy of diversification that we adhere to. That will help keep you from worrying about the direction the market is headed and how top-heavy it’s becoming.
Redefining Wealth® Custom Blueprint Income Plan: https://redefiningwealth.info/schedule/
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https://podcasts.apple.com/us/podcast/retirement-talk-podcast-with-laura-stover/id571347188
How to Connect:
redefiningwealth.info
lswealthmanagement.com
Schedule a Review: https://redefiningwealth.info/schedule/
Timestamps (show notes):
6:00 – Large tech driving the gains in the S&P 500
9:53 – Why the dollars in the portfolio are the problem
11:28 – The gains are very modest for the majority of the S&P 500
15:29 – Resisting the temptation to chase the hot streak
21:58 – How to structure a portfolio for diversification
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