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Alphabet Inc. (GOOG $311.69)
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NVIDIA Corporation (NVDA $191.55)
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iShares Core S&P U.S. Total Market Index ETF (XUU $68.52)
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Invesco S&P 500 Equal Weight Index ETF (EQL $41.93)
I wasn't so much asking about my own strategy, but whether you think such a strategy (moving some money out of tech and into the broader market) is a good move in the current climate.
NVDA and GOOG are part of the same theme. Do you think these are winners to be held on to, or whether trimming a bit to put in the broader market would be wise?
Question: Given that the market is broadening out and that I would like my portfolio to follow suit, I am thinking of switching half of my money in XUU, a market-cap weighted fund which makes up about 10% of my portfolio, to EQL, an S&P equal-weighted fund.
What would your opinion be on that?
Also, along the same line of thought, I'm considering trimming NVDIA and GOOG although the mere mention of it has my investing friends screaming "NO!". They understand the sentiment but think it's not the right time.
Answer: We think XUU is a solid fund, but if diversiifcation is a goal then we think EQL makes good sense. For example, XUU currently is about 42% tech. EQL is barely at 10%.
So essentially it becomes a timing question on two stocks. We like both. GOOG has a much more diverse business than NVDA so if an investor wants to broaden out exposure we would be more comfortable keeping GOOG due to its business diversity. We would not view NVDA as a sell, but it has short term risks (earnings tomorrow). But in any question, we think portfolio decisions and personal risk and goals should override any single stock decision. As a rule, diversification is always a good move, in our opinion. Still, we would be very comfortable keeping both stocks as long as position size is not so high as to be betting on two stocks instead of running a proper portfolio. Timeframe is also important. If an investor has to withdraw capital within three years, we would lean more heavily into diversification.
Authors of this answer, directors, partners and/or officers of 5i Research and/or affiliated companies have a financial or other interest in GOOG, NVDA.