This time we’ll have a deep dive into Humphrey Yang’s exemplary portfolio. Being a retail investor for a long time, I know that you meet so many great portfolios along the way, but you just can’t resist spoiling it with Virgin Galactic (ha-ha). So let’s break down Humphrey’s portfolio and see if it is in fact rock and solid.
The first and the largest individual position is in VOO, which is an ETF for S&P 500. We know that investing is a difficult game of beating the market, but instead of competing with it he uses it as a stabilization point. Good move!
But the future is digital, so then we have five growth stocks with exposure to all major trends: EV, fintech, cybersecurity, and e-commerce.
The other stocks mentioned here are also great and diversified, and they are less risky than growth stocks because they’ve been on the market for a long time and generate big, stable revenues. And pay good dividends, for example, Home Depot and Bank of America (Warren Buffet’s favorite stock).
This Portfolio Rocks, but is it Solid?
The surprising part for me was crypto. The portfolio already seems quite ‘techy’, since we had 25% in growth stocks but then 5% in Apple and Google, and another 5% in crypto, which turns into 35% in rather risky and one-themed assets.
However, according to the test, it played out well. And just like Humphrey said, crypto is a ‘magnifier of risk, but the potential upside is also great,’ so it did. Here’s how the portfolio compares with S&P 500 and Nasdaq.
Note: let’s assume we bought all the stocks in this portfolio in the same proportions as in the spreadsheet some time ago (3 years, 1 year, beginning of 2022) and held them until today without rebalancing. This result is mostly due to the crazy growth of Bitcoin, Ethereum and (guess what?) Tesla.
TTF — Humphrey Yang’s portfolio for 2022
The vertical axis is cumulative return
Applying This to Your Unique Individual Self
The portfolio is stable and well-diversified across categories and interests, but it’s not perfect for everyone as there is no one-size-fits-all solution. This portfolio would be perfect for young investors who are interested in tech and have a slightly-above-average risk tolerance.
They’ll get rewarded for their courage, but one needs guts to watch every swing of Tesla or Bitcoin. By swings I mean Bitcoin has recently fallen 53% from its peak. Or a better example, Shopify — minus 74% in a year.
If any of this sounds confusing, do not get discouraged. On the graph above you see that you have substantially outperformed the market and have room for correction. This portfolio is amazing for beginners, and we recommend checking out Humphrey’s video, where he makes some great points. Our favorite one is that if you are investing for the long term (as you should be), the best time to invest is now, no matter the market situation.
However, those who are more risk averse could find such a portfolio too stressful and tech-heavy. In your case you could do the following:
1) take out the crypto part and replace with one of 5 ETFs mentioned in his other video Index Funds to Own For LIFE;
2) add gold to stabilize the portfolio against inflation;
3) add commodities if you want to play along with the economic cycles.
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