SP500 question

I am a believer that tech and growth stocks will always out perform total market in the longer term, but have alot more volatility. As long as you are buy and hold investor, then I would say let it ride. We also hold quite a bit more tech through tech etfs.
 
RetiredHappy said:
I am a believer that tech and growth stocks will always out perform total market in the longer term, but have alot more volatility. As long as you are buy and hold investor, then I would say let it ride. We also hold quite a bit more tech through tech etfs.
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Only problem with buy and hold is: How long can you hold when you're pushing 80? :facepalm:
 
be aware that an SP 500 index fund may not be as diverse as you thought.
That said, you can buy SP 500 funds that do diversify equally.
Depends on your strategy
 
The SP500 has had a Technology giant concentration for the past few years, and does not adequately represent most large and mid-cap value companies. You may want to diversify by selling some of your SP500 fund and buying DVY Select Dividend ETF, which according to Portfoliovisualizer consists of 53% Large Value, 35% Mid-Cap Value and 12% Short Term Treasuries.
 
I have zero interest in the S&P. The obvious answer to concentration in the S&P is to diversify. VT/VTWAX is our choice.
 
Koolau said:
Only problem with buy and hold is: How long can you hold when you're pushing 80? :facepalm:
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What else are you supposed to do with them? 😄

After a while, the cap gains get terrifying and you're best leaving someone the step-up. That's where I am on two stocks....kinda stuck collecting the dividends at this point.
Sell a little bit at a time? I'd have to live until I'd be 147 for that to make sense!

Rich man's problem, I guess.
 
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marko said:
What else are you supposed to do with them? 😄

After a while, the cap gains get terrifying and you're best leaving someone the step-up. That's where I am on two stocks....kinda stuck collecting the dividends at this point. Rich man's problem, I guess.
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Personally, I have % PV targets and when it doubles (like go from 3% to 6%), I sell half. I fear unrealized capital losses more than realized capital gains I pay taxes on.
 
Gallaher said:
be aware that an SP 500 index fund may not be as diverse as you thought.
That said, you can buy SP 500 funds that do diversify equally.
Depends on your strategy
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Joe Terranova talked a little about this on CNBC this morning. Cap weighted S&P vs equal weighted S&P. He said don't agonize over which is better at any moment in time. Pick one and stick with it. I go with cap weighted VOO and pair it with AVUV. Yes, I believe in the S&P. If anyone follows Paul Merriman team on the historical performance, the data is hard to dispute. And he has ways to improve it.
 
PaulR888 said:
Personally, I have % PV targets and when it doubles (like go from 3% to 6%), I sell half. I fear unrealized capital losses more than realized capital gains I pay taxes on.
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Many of our postions have 100% to 250% gains and many of these positions started in 2013 when ML took over our funds and sold everything that we had then. We took them back in end of 2021 and have sold very little in taxable accounts but added more. We have no capital losses.
 
RetiredHappy said:
Many of our postions have 100% to 250% gains and many of these positions started in 2013 when ML took over our funds and sold everything that we had then. We took them back in end of 2021 and have sold very little in taxable accounts but added more. We have no capital losses.
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If still with Merrill Lynch, I am sure they are watching concentration risk for you. Something to include in your client meetings with them.
 
You could always buy an equal-weight S&P 500 ETF like the Invesco S&P 500 Equal Weight ETF (RSP).
 
Lot of concentration. That's what scares me when people suggest things like SPYI for income. I'd be concentrated on growth and income.
 
PaulR888 said:
If still with Merrill Lynch, I am sure they are watching concentration risk for you. Something to include in your client meetings with them.
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Fired them in 2021 as we were paying 6 figures in capital gains, they were churning without regards for taxes.
 
joesxm3 said:
Am I reading this list of top ten SP500 weightings to show that almost 35% of the SP500 is made up of 9 tech companies?

https://twitter.com/x/status/2071526818793115983
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Koolau said:
Good point.


Not sure what to think of this info. I'm happy with my S&P fund's performance but, yeah, that's pretty concentrated.
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There is always extreme concentration in the S&P500 as usually a small number of companies dominate and they are usually in one or two industries. However, over long periods of time leadership and dominance and even industries change.

I’ve posted this before:

I invest in the total market index with additional investments in the medium and small cap indexes, plus international. However, the same companies dominate, just not quite as much.
 
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OldShooter said:
I have zero interest in the S&P. The obvious answer to concentration in the S&P is to diversify. VT/VTWAX is our choice.
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I understand the sentiment, but is there really much practical difference? If you took the top 10 in SPY and their % allocation, what are the % of those in VTWAX? OK, I asked AI, and since VTWAX is ~ 60/40 US/international, the exposure to those stocks is ~ 40% less.

I guess it depends if you feel INTL exposure is important (I think you do, IIRC), and it has really pulled down the performance of that fund. Of course, that could be cyclical, and we will see a return to the mean. I'll hold on to my thought (realizing I may be wrong), that US stocks have enough international exposure in their business.

Once could also dilute SPY or VTI (still US, and only slightly less weighting of those top holdings) with the small cap index. Personally, I don't worry about it, VTI is close enough for me, but that's just my personal feeling.

From testfol.io (VTWAX - Admiral Shares, doesn't go back as far as VT, but performance should be similar). That's quite a drag :

1782787213824.png
 
The ten largest US companies didn't get to where they are by losing money constantly. Think about it a bit.

That being said, you can always buy a bit of VXF to counter balance your holdings in VOO and/or VTI. VXF has done well lately...
 
Instead of VT, you could buy a combination of VTI, VEU and VWO to your liking. Then if you wanted to reduce your international or em exposure you wouldn't have to sell more of VT to get there.
 
ERD50 said:
I'll hold on to my thought (realizing I may be wrong), that US stocks have enough international exposure in their business.
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I don't want to get into the general allocation argument, but I keep seeing this rationale that holding only US stocks produces adequate international exposure.

If true, then there should be a similarly small portfolio of non-US stocks that gives an investor adequate US exposure. Can you suggest one?
 
I added SCHF a while ago and I'm happy with it.
There is an equal weight ETF of the sp500 that I also hold, RSP, and it has lagged the cap weighted index for a while now.
 
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