iBankCoin
18 years in Wall Street, left after finding out it was all horseshit. Founder/ Master and Commander: iBankCoin, finance news and commentary from the future.
Joined Nov 10, 2007
23,417 Blog Posts

What Does a Diversified Portfolio Look Like?

On the side I do a little investment coaching and often run into the issue of diversification. For some reason, people tend to believe that if they have 20 tech stocks in a portfolio they are diversified. While not all tech cos are the same, this is a disaster waiting to happen in the event of a risk off scenario. Tech and healthcare always get hit most severely in sell offs, so if you’re structuring a portfolio for the long term — you need to make sure the allocations are balanced — but not too spread out otherwise you become an index fund.

Here is what I consider to be a diversified portfolio. Bear in mind picks change often — but the weightings are what’s important.

Basic Materials (15%)
$PBR (5%)
$SU (5%)
$PR (5%)
Consumer Goods (10%)
$RACE (3.3%)
$VRT (3.3%)
$CELH (3.3%)
Financials (10%)
$JPM (3.3%)
$MUFG (3.3%)
$UBS (3.3%)
Healthcare (10%)
$NVO (3.3%)
$DXCM (3.3%)
$ALNY (3.3%)
Industrial Goods (10%)
$BRK.B (3.3%)
$TDG (3.3%)
$HEI (3.3%)
Services (10%)
$BKNG (3.3%)
$LVS (3.3%)
$CP (3.3%)
Tech (20%)
$NVDA (5%)
$PDD (5%)
$NOW (5%)
$CRWD (5%)
Utiltiies (5%)
$NEE (2.5%)
$PAM (2.5%)

cash/special situations/trading (10%)

Now the picks can be adjusted quarterly or even monthly, however you decide. The important point to this is the structure. Admittedly, I do not always deploy this method for my accounts, since I am my own fiduciary and consider myself hyper-fixated/expert tier investor — who can make adjustments when needed. However, for 99% of you out there — you need this structure.

The 10% cash can be used for special situations, hedges, trades, or alt investments such as $BTC. With that 10%, gains should be reallocated back into the portfolio at adjustment intervals.

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