Don’t Forget to Diversify!

Hard to swallow a 3% drop in the S&P 500 and a 5.5% drop in the NASDAQ this week. The Dow held steady, some Russell 2000 tracking funds actually did well, and I guess it’s a good idea to hold bonds too.

I know many folks out there love the “VTSAX and relax” philosophy. It’s a good, simple option, but I just can’t sit with that. Yes, it’s already diversified and there’s no point in trying to beat the market.

Who said I was trying to beat the market? (By the way, don’t try to beat the market.) I’m trying to find that piece of the pie that makes sense to me and the future. There are many funds focused on water & other resources, future tech industrial and health discoveries, future energy solutions, etc. Some are ESG funds. Some are not.

Try not to focus on labels or fancy terms. Focus on what makes sense to you. Overall, I like funds because the busy work of picking stocks is done, and they are diversified within their economic sectors with anywhere from 25 to 200 stocks in the fund. You might need two or three different funds to make sure you’ll have the broader diversity you need.

Sometimes individual companies are good to track over time, such as VEIR for example. They’re researching new powerline technology that integrates superconductors to improve line capacity 5 to 10 times! It may not be this company that launches the tech, but simply knowing it’s coming puts you ahead of others who only invest in one, broad fund.