/biz/ - Business & Finance

>>1117602
>Whats better, a three or four fund etf portfolio which is topped up quarterly/biannually or one growth mutual fund added to monthly?
A four fund portfolio because of the substantially better diversification.

Growth stocks are wonderful, but they're not inherently better than value or blend stocks. Like all asset classes, they'll perform very well in some years but poorly in others, And, unfortunately, its impossible to predict in advance. As such, its best to spread your money across as many asset classes as possible, consistent with your goals and risk tolerance.

>>1118068
>It has the same effect.
No it doesn't have the same effect. It has an effect in the same direction. Banks didn't automatically loan out all that cash sitting in their reserves (despite the Fed urging them to do so). In the wake of the mortgage crisis, banks massively tightened their credit standards, and for a long time, it was substantially harder to get credit of any kind. So no, the QE money didn't fly out into the economy and straight into equities.

Furthermore, typical (bad) investor behavior meant that many investors were buying bonds at the time they should have been buying stocks (despite QE). Look at fund inflows in 2009, 2010 and 2011 (and even into 2012 despite the bull market being 4 years old). People flocked to the apparent "safety" of bond funds at the exact moment that equities hit their glidepath. Investors always get it wrong.

>Why do you think indexers loved the 2009-2014 market so much? Because we were the one's who benefitted the most. All you had to do was stay the course and not change your strategy, and you nearly tripled your net worth.

So, ironically, to the exact that any of those QE dollars did make it into investor hands, a substantial portion went into fixed income.

Now, again, for the third time, I'll state that QE did have a positive effect on equity prices. That's not debatable. But the degree and timing remains open to examination.

>>671838
I wouldn't be at all comfortable being so over-weighted in tech and biotech. Even if you know the field well, that doesn't mean you can accurately predict tops and bottoms. Consider yourself fortunate to have performed well in the short-term, and now consider diversifying into a much broader portfolio.

No one knows what the next hot sector is going to be. Last year's hero may be this year's zero. Or not. Which is why we diversify.

>>671842
>the remaining 5%
No worries here. I have a play money account too, that also makes up about 4% of my gross portfolio. As long as you're disciplined with the bulk of your wealth, I don't see much harm in taking bolder chances with a small piece.

>>636757
Because from year to year, the market segments that perform better will change. Last year's zero may be this year's hero.

Also, people use allocations to achieve a certain risk and income profile. When the allocations get out of alignment, they aren't matching their strategy.

Every year, certain asset classes outperform while others underperform. Last year's heroes may be this year's zeroes, and so forth. No one can reliably predict the winners or losers on a consistent basis, so the best bet is to own them all in reasonable proportions based on your risk allocations. This is the strategy you adopted when you bought in to the sectors.

So I guess you have two choices:

1. Abandon your strategy and instead try to outsmart the markets by selling your underperforming equities at their low point; or

2. Stick with a principled long-term strategy and don't lose sleep over normal short-term performance variability.

Whichever you choose, I hope it works out well for you.