Like many investors in reddit and the market overall, I find myself in a position where my portfolio is heavily tilted towards big tech and the Mag 7.
I'm a young investor (early 30s) with a lengthy time horizon so I have no problem with my high degree of tech exposure since tech is often the sector with the most growth potential in the long run.
Given recent events and the fact that a large portion of my 2024 gains have been wiped out in the last three weeks, I'm interested in finding ways to diversify my portfolio, while still remaining relatively aggressive overall. I know that this may be a bit of an oxymoron as diversification often caps your overall potential growth, but I'm sure there is a balance that can be struck.
My problem is that I'm not sure how to best go about finding that balance and diversifying.
My portfolio is already something like ~40% VOO and ~25% QQQ, with a decent portion of the remainder in individual Mag 7 and other tech and telecom stocks. I thought that by having more than half of the portfolio in VOO and QQQ that this was decent diversification enough, however the Mag 7 is such a major component of both of these index funds, that I'm basically double and tripling down on the performance of big tech companies. I liked this composition when it was booming of course, but the last several weeks are a stark reminder that a little bit of defensiveness is never a bad idea.
In reading about diversification options, so many resources tells you to consider bonds and T-bills, or gold, but in order to diversify enough that it would have helped me in a situation like the one we've been in recently, I'd have had to put in a large enough fraction of my portfolio into these investments that my aggressive approach would have seriously been undercut in doing so.
I've considered adding more exposure to other sectors of the market such as utilities, energy and industrials, but I feel like I don't know quite enough about these sectors and how they behave in market downturns to properly make informed selections. I do like utilities and energy because they are more non-cyclical than tech and telecom.
How are you all approaching the matter of diversification while also remaining relatively aggressive. I'd love to find a sector of the market that is completely uncorrelated to tech that I could put a fair amount of money into and thereby cut my risk down by a lot while still maintaining relatively similar gains (Ray Dalio has a fantastic spiel on this approach).
Thanks for reading, appreciate the input!
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