Diversification or indexing?

So with the universe boasting 5000+ entries I’m very near 1% (meaning I’m close to owning 50+ different stocks) which is about 1/10 of my final goal.

Although not equally weighted I have recently started paying more attention to markets etc and specific industries (not quite indexing component parts). I am planning to have this inform my decision making in future.

This idea came about from sustaining very, very very heavy losses in the past three months (for reasons I won’t go into here) and having a long hard think of how to avoid same in future.

Wondering how other freetraders go about building their portfolios?! Do you have a percentage you are aiming for in terms of industry or exchange? Is this something you are paying attention to? Can you think of any downsides (or upsides etc) that you want to share?

Any thoughts appreciated

1 Like

My allocation is: 40% cash (I use this mainly as an emergency funds or extra funds to dollar cost averaging in case of a crush/correction) 20% crypto, 40% equities with a mix of index funds (30%) and individual picks.

I am heavy on tech: Apple, Facebook, Nvidia, Microsoft, roblox, Amazon. Also, on energy (all renewable and risky assets, ITM and Ceres are the main ones). Then mining (greatland gold and eurasia).

For the near future I will be adding consistently every month, in terms of allocation will be almost exclusively cryptocurrencies (especially coins/tokens which support staking).

I am not specifically picky in terms of allocation (volatile assets can be a pain though) but I like to stir my assets in the direction I see the better for potential/ethics/profit.

1 Like

This is a pretty good thread:

Almost no one will beat index investments over the long term. So the easiest and most profitable way is likely just to buy an index and not stocks. But do whatever gives you joy :smiley:

4 Likes

Without the slightest hint of irony here

I am really glad you mentioned joy.

The fact that I’m doing what I’m doing is probably gonna sound horrible to some “conversion to the mean” and “I got all the data” type of pukes…

but the fact that I can follow my own ideas and be responsible for what I’m doing does give me “joy” and a sense of achievement. It’s quite empowering.

3 Likes

This is probably where I’m really lacking… ie allocating cash! Thanks for sharing it is appreciated

2 Likes

Watch this video of Warren Buffet talking about a punch card with 20 holes: Warren Buffett's Best Advice on Successful Investing - YouTube

I think owning 500 different stocks would be way too many for me.

2 Likes

@Sentinelgre

I started out buying so may stocks without rhyme nor reason it got very quickly out of hand. The freedom to buy at zero commission lured me in, the excitement of so many stocks to choose from…

After a few months I realised this was not a good strategy and slowly have been winding down the number of stocks I own and developing a portfolio strategy.

My aim is to have about 70% of my investment £££ in ETF’s. Of these half are very diverse such as S&P500, Ishares Global etc… The other half are targeted ETF’s in sectors I think have huge potential such as Battery Value Chain, Cyber Security, Robotics and Global Clean Energy. There will be some double dips with this as some of the specialist ETF companies will also be in the S&P500, Global ETF’s etc… I’m not really concerned about that.

The remaining 30% is then for me to pick individual stocks. I always want to have some stocks like this, I like to learn about companies, about investing, researching etc. and picking individual companies puts my theories to test without risking the whole pot of cash.

For the individual companies I currently hold

Lloyds
Britvic
Luceco
Rentokil
Strix
Spirent
Circassia Group
Draper Esprit
Ridgecrest PLC
Aviva
GSK
Tern
BT
Sainsbury’s
Hyve Group
Jaws Spitfire Acq Corp
Nightcap
Cellular goods
Fiverr

At the moment I am not at that portfolio split. Still have too many companies in my opinion, not enough ETF’s, but getting there bit by bit. Taking profits from some of my companies, reinvesting into ETF, that sort of thing.

That’s how I’m doing it, not financial advice at all, just my way to play…

2 Likes