Today I lost more than 2% of all my overall Stocks portfolio and here’s the reason why
I started my investments on stocks more seriously since the beginning of this year. From here, I tried to grow my portfolio value through the purchases of new stock and ETFs and with the expectation of market appreciation.
In May of this year I had my shares distributed among 12 companies. This companies are mainly on the Tech sector, but I also had in the health and food industry.
Since August, I decided to restructure my portfolio and focus my investments on just seven companies. I did this adjustment to focus on companies that I truly believe on good growth of value. And, in fact, this approach has making some good results. However is too soon to validate if this strategy is good.
Today I have stocks from 7 companies that are all on the Tech sector. Because of this, today all of my stocks were loosing and I lost more than 2% of all my portfolio.
The main reason of fall of coinbase and uber is due to the release of the results of the 3rd quarter that fell short.
The importance of having a diversified stock portfolio
Diversifying stocks across different companies on different industries can help to minimize significant declines as today.
Watching for the overall results of S&P 500 (fund which aggregates the best 500 companies in the US) today (10/11/2021) was a negative day. But since I have more expressiveness in the IT sector it was an even more negative day!
Investing in funds like this, is one of the ways to guarantee diversification. It distributes my investments on companies from all the sectors. If stocks of one sector falls, others can may have positive results. This minimizes the risk of having huge losses.
At the moment, I invest in one ETF which represents more or less 17% of my current stocks porfolio: iShares Core MSCI World UCITS ETF USD (Acc), which aggregates companies from all over the world. The surprise is that this ETF give me a positive result in a bad day (+0.36%).
My feelings:
- If I had my stocks portfolio distributed through in other sectors despite the tech sector, the losses might not be that significant today.
- The fact of having an ETF with positive result proves that bring more security. On other hand, the value oscillates slower preventing faster growth.
- I’m taking some risk putting the majority of my portfolio on the Tech sector, however on five of my seven stocks I have more than 20% profit (in less than a year). No ETF can give me that. (Only the Uber stock have a negative value).
- I truly believe in the companies I invest in. I’m willing to take this risk despite days like today. Let’s see how it goes from now on…
- I also should increase my investments on ETFs.
