I generally agree with the benefits of a market weight portfolio, but the size of the Mag 7 stocks have me concerned. They now make up 35% of the S&P 500, and consequently a large part of my portfolio. They are also concentrated in a single sector: technology.
The general advice over the years has been to avoid having a portfolio concentrated on a few stocks, or a single sector. But isn't that exactly what has happened us indexers with the Mag 7? Those of us who have been holding a market weight portfolio over the last few years now have, for better or worse, a portfolio very concentrated in a handful of tech stocks.
Doesn't this run counter to the Boglehead principle of having a well diversified portfolio? For those older investors, was there another time where we saw an index so heavily weighted towards a few stocks in a single sector like this?
I continue to stick with our international allocation for diversification, but I'm growingly increasingly concerned about the concentration of the Mag 7 in our US equity allocation and wondering if it makes sense to add some small and mid-cap?
Obviously I can't predict the future, but history tells us that individual stocks can't keep going up exponentially forever, and I just want to have a little more ballast for when the market corrects or the Mag 7 crash.
The general advice over the years has been to avoid having a portfolio concentrated on a few stocks, or a single sector. But isn't that exactly what has happened us indexers with the Mag 7? Those of us who have been holding a market weight portfolio over the last few years now have, for better or worse, a portfolio very concentrated in a handful of tech stocks.
Doesn't this run counter to the Boglehead principle of having a well diversified portfolio? For those older investors, was there another time where we saw an index so heavily weighted towards a few stocks in a single sector like this?
I continue to stick with our international allocation for diversification, but I'm growingly increasingly concerned about the concentration of the Mag 7 in our US equity allocation and wondering if it makes sense to add some small and mid-cap?
Obviously I can't predict the future, but history tells us that individual stocks can't keep going up exponentially forever, and I just want to have a little more ballast for when the market corrects or the Mag 7 crash.
Statistics: Posted by NYCaviator — Wed Dec 25, 2024 7:43 am — Replies 46 — Views 1475