My sector choices

Hi everyone. Let me first say that I love the app and the community around it <3.

I am completely new in the stock market world. I am thinking about some long term investments in the following sectors:

US Tech 11%
Non-US Tech 22%
Green Energy 20%
Quality Food 20%
REITs 15%
Semiconductors 12%

Does that sound reasonable in terms of lowering the risk in spreading into different sectors? Thank you so much for your feedback.

Cheers Martin

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I would say your portfolio is very growth and speculation oriented because:
45% in tech, 20% green energy (green energy is mostly utilities, tech and industrials).

If your goal is lowering risk by spreading into different sectors you should spread into sectors with lower correlation. Tech, semis (kind of the same sector but okay) and green energy have a high correlation so more diversification benefits would be gained by diversifying into other sectors.

Financials, healthcare, materials and even regular energy (but seeing you have clean energy you might have moral objections which is completely fine), would improve your sector and factor diversification (the latter one meaning that you also have some value-oriented stocks which are more prevalent in financials and materials than in tech).

Hope this helped :smiley:

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I agree with a lot of above points. Especially as a new investor you really dont want to take big losses right out the gate as may impact your overall view.

I would say generally maybe have a look at and research:

20-30% ETFs (some of this can be clean energy etf if you wish, but also S&P tracker like VUSA and maybe a Chinese one like FCSS or BGCT)

Then various amounts in:
Tech - Focus on some companies you like but mostly are solid like Microsoft, Amazon, Apple
Consumer - Again have some solid (Unilever, Coca Cola) and some growth (Starbucks)
Financial - Including Payments (Paypal, Visa, Amex, Stone, Square) and banks (lots here depending on country/style you want)
Healthcare - JnJ (stable growth and dividend growth), Merck, GSK (for a stable dividend)
Energy - Check out NEE which is renewables but stable and a solid dividend too. Mix with current ones maybe like Shell or BP (small amount)

Dont know much about REITS or semiconductors but I own NVIDIA in my tech pie.

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thank you so much guys :blush:. Rergarding ETFs. I was kind of thinking of “cutting” the middleman with not choosing ETFs. As if I understand correct those are managed from professionals. And those want their fair cut right? Makes that sense :smiley: ?

Yes depending on the ETF fee varies, but you dont see that it just less your returns (by a small amount). Main reason I said that is just to give stability to your portfolio while you start. Equally if not ETFS then just make sure you have a good portion 70-80%+ in big tried and tested companies like:

JnJ
Microsoft
Apple
Visa
Coca Cola
Starbucks

etc that way you will be tad more stable rather than putting all in uncertain growth stocks.

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You might wanna look at StoneCo and UpWork, solid stocks at a “decent” price :slight_smile:

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@damadden88 Hi. One basic idea of diversification (no matter region you are interested in investing); taking into consideration the S&P 11 sectors to choose your companies:

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@Hbomb and @damadden88 Regarding semiconductors you may consider STM that I bought a few weeks ago, headquartered in Switzerland, but also in the US market. Is doing very well and is still relatively cheap: $41. I suppose the price will continue to go up because the voice is starting to spread and semiconductors are doing well.

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@damadden88 If you are interested in the European market, I remembered another semiconductor company of my portfolio that is doing well and, for now, is not to expensive (29€): IFX (DE)

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The price per share is irrelevant.
A thing that does matter is the market capitalisation and how it compares with other metrics (profit, revenue, EBITDA, debt, etc). The market capitalisation is the share price multiplied by the number of shares. It is the price of the company, assuming someone wanted to buy all the shares.

For example, STM has a market capitalisation of $37.32 Billion and a price to earnings ratio of 41, all according to marketwatch: STM Stock Price | STMicroelectronics N.V. Stock Quote (U.S.: NYSE) | MarketWatch

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@EquityInvestor All matters… nothing is irrelevant in the market. Besides, ‘irrelevant’ is a subjective word, maybe something irrelevant for you is not irrelevant for other person’s strategy. Said that (with the necessary modesty), the information you gave is relevant, at least for me.
On the other hand, P/E is not SO important nowadays. For example, you can do the same research you made for STM in marketwatch for TTD.

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Price per share is irrelevant in fairness, imagine if they did a stock split to make a share price say 10 bucks, it doesn’t mean the stock is cheaper. It’s just got more float.

PE at 41 could be reasonable given some of the ratios.

I don’t really have any semis so I’ll check out STM

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And if you want IFX: price 29€, P/E 105,68. :wink:

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I thought about it and you @Hbomb are right. I could compensate my inexperience with going into 20-30% ETFs and might shift it when I become more experienced.

Thanks again to you guys for helping out a young family to make some smart long term decisions :hugs:

That’s pretty much my ETF split for now as well :ok_hand:.

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More or less is also my split. Good decision @damadden88. I am investing in Index funds with my bank, investme.com and Indexa Capital (Spain) and I am satisfied. Right now this is a very volatile market and my money is relatively saved with them (more or less only 50% in equity and managed by professionals, with a decent return). You should find something similar in your country with low or 0 commissions (at least for the first year depending on the amount you invest).

Good luck! :slightly_smiling_face:

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With the help from all of you, I put together a document which kind of captures my stock market investment plannings. https://www.dropbox.com/s/h6jjap9hzvvrakv/plan.pdf?dl=0

Thanks again :slight_smile:

I’d recommend VUSA and a Bailie Gifford ETF also.

Obviously do some research into them prior
To investment should you chose to invest.

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Yes VUSA is a good start, BG too if you go for one with international exposure. I am about to open a position in ESPO ETF which is about gaming industry so I see your interested in that so maybe worth a look.

That’s a good shout on the gaming industry.

The problem is want a piece of too much :joy:.

I’ve only got around 4K invested in around 22 positions, 30% of which are ETF, 2 are swings and the rest long term positions so I don’t want too over diversify if there is such a thing.

Planning on using swing profits to top up long term and then pick another swing with the initial starting swing balance.