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How to diversify out of US Domestic stocks

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Hello,
   I am heavily invested in US Domestic stocks via mutual funds and also all my stocks are in tech stocks like Apple, Google, Facebook, Nvidia etc. I invest in US tech stock because I know the companies well being a software engineer. I want to diversify such that a fall in the US stock market doesn't wipe out all my gains. However, while doing research it seems like investing in global stocks is not going to help with diversification much either since they are nowadays closely corelated to US stock market. Any suggestions? Bonds are really low return but will investing in them help in the current market situation?

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rated:
Invest in a S&P 500 ETF/mutual fund. Even under a train wreck, different sectors behave differently. Global diversification helps a bit since you are spreading your risk more evenly. In a market collapse situation in US will likely trigger similar effect across the globe but the rate of recovery from a collapse may be different. By diversifying your investment, you are not shooting for large gains but mitigating risk.

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Bitcoin

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salilsurendran said:   Hello,
   I am heavily invested in US Domestic stocks via mutual funds and also all my stocks are in tech stocks like Apple, Google, Facebook, Nvidia etc. I invest in US tech stock because I know the companies well being a software engineer. I want to diversify such that a fall in the US stock market doesn't wipe out all my gains. However, while doing research it seems like investing in global stocks is not going to help with diversification much either since they are nowadays closely corelated to US stock market. Any suggestions? Bonds are really low return but will investing in them help in the current market situation?

  I protect myself by diversifying into companies that are a bit more resistant to recession or downturn, i.e., blue-chip companies.
Everything else depends on your age.  I'm young enough that I don't care much about downturn since I have about 30-35 years to retirement. So, I don't do bonds right now, but in another 15-20 years, I will start allocating for bonds.

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look into emerging market mutual fund. i'm partial to Vanguard

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Go to the Bogleheads site and start reading.

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US stocks aren't a horrible thing to be in, but you're not diversified if you only own tech stocks. You should have something broadly diversified then speculate on tech in your area of expertise with a small fraction of your portfolio. If equities and real estate are too volatile at 100% allocation, temper it with bonds. In fact, a mix of stocks and bonds has a higher risk-adjusted return than stocks alone, but the absolute return is lower, so it requires leverage to get the same return as equities but with less volatility.

I recommend David Swenson's books for an overview of the major asset classes and how they interact with each other. He's the (former?)  portfolio manager of the Yale endowment,

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buy what you know. But that doesn't mean just tech. What do you drive? what do you use around your home? Anything you see as popular among your co-workers or friends?

Back in 2007, I picked up some stock. Some that have done well for me: Macerich, Toro, and Lifetime Brands.

  • I bought Macerich because they're a REIT in malls that basically owned every mall in my Metro Area.  Plus, appeared to have none that might be subject to hurricanes.
  • Toro?  I use their lawn equipment and they were a mid-cap stock
  • Lifetime brands?  They own quite a few brands I recognized (and used).  And they were a small-cap stock.

In each case, I poked around quite a bit before pulling the trigger.

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Schwab has some very low fee index funds that include an international index fund and bond funds. Worth a look at. I do have some of these:

http://www.schwab.com/public/schwab/nn/m/indexfunds.html

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avalon6 said:   Bitcoin
  OP seeks investment diversification advice, not gambling options.

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Here is a correlation table, but asset class correlations can change over time: https://www.portfoliovisualizer.com/asset-class-correlations

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micha8s said:   Back in 2007, I picked up some stock. Some that have done well for me: Macerich, Toro, and Lifetime Brands.

  • I bought Macerich because they're a REIT in malls that basically owned every mall in my Metro Area.  Plus, appeared to have none that might be subject to hurricanes.
  •  


  
You invested in malls in 2007?!?  Yikes.

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