The #1 Position in My Portfolio

It's the easiest way to beat the market...

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I’ve spent my entire career helping people navigate financial markets.

Those years included three bear markets, two cryptocurrency crashes, and a global pandemic.

But throughout these market cycles, there’s one position that’s always remained near the top of my portfolio.

This is by design, as this holding has helped investors create massive amounts of wealth in the stock market for nearly 100 years.

Leave 2021’s Strategies in 2021

Some of you started investing in 2020 and 2021.

This period was typified by “straight up” markets with little-to-no volatility.

There were a few reasons for this:

• Extraordinary monetary support by the Federal Reserve (i.e. money printer go brrrr)

• Unprecedented fiscal stimulus (i.e. stimmies)

But that was then, and this is now; the Federal Reserve has pulled their monetary stimulus via the fastest interest rate hikes in 40 years.

Yet the bad habits many people learned during the last bull run carried over to 2023.

How do I know?

Well, you told me…

The Largest Position in YOUR Portfolio

I posed this question to my 102,000 Instagram followers last week:

I had over 450 responses, and the most common response was Apple (AAPL).

I’ve held a position in Apple since 2016. While it’s been a core holding for seven years and risen over +400%, it’s still a great long-term hold suitable for all investors:

But I can’t say the same for many of the other responses, many of which came from new investors who think the way to make money in markets is to bet big on high-risk investments.

For instance, multiple people said the largest position in their portfolio is electric vehicle company Lucid Motors (LCID). While I am optimistic about the electric vehicle industry, this is a highly speculative stock only worthy of a small (1% to 2%) position in your portfolio.

A few others had AMC Entertainment Holdings (AMC) as their top position. I’ve never been a fan of meme stocks. In fact, I publicly called the top of the meme stock craze in Time Magazine back in July 2021…

…which was a good call as many meme stocks are down -90% or more since:

I understand some people will gamble on meme stocks no matter what. But if you do, you must size your position appropriately.

As a rule, highly speculative positions like high-growth stocks, SPACs, and meme stocks should not make up more than 5% of your portfolio.

And with the rest of your portfolio, you want to hold something like my largest position.

My Largest Portfolio Position Is…

As mentioned at the outset, my largest portfolio position hasn’t changed much in the last decade.

And there’s good reason for that. While I’ve only held this position for about 10 years (and add to it monthly), over the long-term it has recovered to make new all-time highs after:

• The Great Depression

• World War II

• Vietnam War

• 9/11

• Global Financial Crisis

• COVID-19 Pandemic

And while it has yet to recover from The Great Inflation, I have a feeling it’s a matter of time until my SPDR S&P 500 ETF (SPY) – which tracks the S&P 500 – hits a new all-time high.

There are a few reasons investors of all stripes should hold S&P 500 ETFs like SPY 0.00%↑ (also known as “index funds”).

ETFs that track the S&P 500 are the bedrock of any investors’ portfolio, as they mimic the performance of 500 large publicly traded companies in the United States…

…and includes companies from different sectors such as technology, finance, and healthcare.

This structure gives investors diversification amongst many sectors and investing trends.

But the top reason to hold S&P 500 ETFs are the long-term gains. Over the last 90 years, the S&P 500 has delivered average annual gains of 10%…

…with the index delivering positive returns in 73% of those years.

And I don’t expect the next 90 years to be much different.

Work Smarter, Not Harder

Holding index funds like the SPDR S&P 500 ETF (SPY) allows me to take bigger risks elsewhere in the markets.

While past performance is not indicative of future results, it’s nearly guaranteed that the S&P 500 will deliver consistent gains over the long-term. Holding a relatively low-risk holding like SPY 0.00%↑ means I can take on higher risks elsewhere in my portfolio. That includes investments in high-growth stocks, cryptocurrencies, and private deals.

And while the S&P 500 finishes in positive territory nearly three-quarters of all years, there will be down years (like 2022). But it’s important to remember bear markets like last year are rare.

On average, bear markets happen every 3.5 years. They also tend to last, on average, for 289 days or roughly 10 months. That’s commpared to 991 days - or nearly three years - for bull markets.

And since gains during bull markets far outweigh losses during bear markets…

…it pays to be a long-term bull.

Holding index funds like the SPDR S&P 500 ETF (SPY) is the easiest way to profit from this historical trend. That’s a key reason the ETF accounts for roughly 15% of my portfolio.

And if I were you, I’d follow my lead.

Stay safe out there,

Robert