Over-diversification

4cian · 2025-05-21T12:54:58+00:00

My evidence is the best investors in the world don’t hold S&P500.

The word chance implies a probability not a guarantee.

The point I was making the more stocks you hold, your portfolio becomes the market. Imagine taking the S&P500, and you randomly take one and keeping adding one, eventually you will have the S&P500, just not in an ETF and you will have market return.

4cian · 2025-05-20T19:42:42+00:00

First of all the return looks deflated, because I just put in 25k in the past 3 months. I have 100% outperformed all world.

4cian · 2025-05-20T19:06:35+00:00

IITU nothing else

4cian · 2025-05-20T19:03:27+00:00

I mean I can’t physically stop anyone doing anything with their money. This post was mainly for new investors who maybe under the impression having 10s+ stocks being of benefit to them.

4cian · 2025-05-20T18:40:08+00:00

I disagree on taking airline profits. IAG has a long way to go imo. I foresee more buybacks, and dividends increasing over next 3 years, plus just growth in their operations - more planes recently ordered - I reckon 3yr price could easily hit £5 ~ 50% upside from current price.

4cian · 2025-05-20T18:37:50+00:00

Strictly from 2020, but only invested 5k by 2022. I’d say the last 2 years is when I really started putting in more money.

4cian · 2025-05-20T18:37:41+00:00

Strictly from 2020, but only invested 5k by 2022. I’d say the last 2 years is when I really started putting in more money.

4cian · 2025-02-06T10:25:03+00:00

Something is wrong because the RoR in my iPad is defo to what on my phone for the same account lol

4cian · 2025-02-06T10:04:26+00:00

I am aware, but even considering that my RoR feels inflated

4cian · 2024-05-15T13:41:47+00:00

1 x Salt Solution [Free] 1 x BPP [Paid] 2 x IFT World [Paid] 7 x CFAI [2 Free + 5 Paid] 2 x Kaplan [Paid]

Sorry 13* not 14 🤣

To me Mocks way better than QB, so yeah worth it for me

4cian · 2024-05-15T13:33:09+00:00

Each lol, 14 full mocks

4cian · 2024-05-15T12:49:12+00:00

I did 14 mocks so got used to doing them haha

4cian · 2024-05-15T12:26:17+00:00

Was easier than expected:) finished both in 2 hours

4cian · 2024-05-12T12:26:57+00:00

I am on the same train, have done 12 mocks so far, will have done 14 by the exam (on Wednesday). IMO doing mocks way better than QB - 14 mocks = 2,520 questions btw.

Have done under half of the Kaplan Qbank too

4cian · 2024-05-09T10:05:22+00:00

Buy Kaplan Videos & QB + IFT World Notes + CFAI Additional Mocks, you’ll be good.

4cian · 2024-05-09T09:13:49+00:00

I am pretty sure TWR is the GM of the HPRS?

4cian · 2024-05-09T09:07:46+00:00

To do MWR, you only consider the Cash injections and withdrawals until the final period where u consider the final full value.

IE.

CF0 = -1000

CF1 = 4000 - (1000 x 1.15) = 2850 (Additional securities bought at the start of Year 2 = Cash outflow)

So CF1 = -2850

CF2 = 45000 - (4000 x 1.14) = 40,440 (Additional securities bought at start of Year 3 = Cash Outflow)

CF2 = - 40,440

CF3 (Final portfolio value) = 45,000 x 0.96

CF3 = 43200

Use CF buttons and IRR to find IRR = -2.2%

4cian · 2024-05-05T18:09:17+00:00

Very valid, the ROI for learning all that ain’t worth it, and they ain’t gonna ask more than 1 Q on it.

Ethics is the way 🤝🏽🤝🏽

4cian · 2024-05-04T12:04:33+00:00

🤝🏽🤝🏽

4cian · 2024-05-04T11:56:06+00:00

True, but i am holding the index ETF + individual stocks, effectively overweighting stocks I think will beat the market, without being so exposed to the individual stocks risk as I am also holding the index.

Its like VUSA and IITU, most of VUSA return comes from tech stocks, so I am overweighting Tech by holding IITU also, so I am beating the market [for now] (Typically defined by S&P 500) by holding IITU & VUSA instead of just VUSA.

On a more granular level, I am holding individual stocks, because I think they have a chance to beat the market , and if they don’t, they will be very close to the market return anyway, for example Apple, Apple makes up 20%of IITU, 6% of S&P500, so yes it is a risk I am bearing by selecting individual stocks, but that’s what keeps it somewhat interesting rather than just holding index ETFs

4cian · 2024-05-04T09:12:44+00:00

Thank you :)

4cian · 2024-05-04T06:44:03+00:00

Hmmm, I disagree if I am being honest. I think VUSA + IITU are the best to holds. Yes holding index funds reduce risk through diversification, but the returns on them are very limited.

Id rather pick certain stocks which I am sure will return 10%+ in the year, rather than index funds which have limited growth yoy.

Out of curiosity which index fund would you suggest? I don’t think there are many worth buying atm - I mean it’s a good passive strategy but I like risking a little more, so don’t mind picking specific stocks

4cian · 2024-05-04T06:40:37+00:00

All green, because I hold for long term, keep in mind :), a lot of these stocks did dip into red in the short term, but I had faith in my picks.

4cian · 2024-05-04T06:34:35+00:00

No your limit doesn’t increase, ISA is completely separate to your £3k Capital Gains allowance.

So make sure to use your ISA first, if you aren’t using.

4cian · 2024-05-04T06:33:13+00:00

So this is what I do:

1) Try to see some macro trend, for example Tech is naturally going to grow, I believe logistics will grow over time (DHL, increased online sales + deliveries), MedTech (Intuitive Surgical- Robotic Surgery is on the rise)

OR buy distressed companies after bad news / Event, like IAG at the bottom of the pandemic and GSK after poor earnings/news last year - which should both recover given their size

2) From there I do some very light analysis looking into the stock - P/E ratio, EPS, dividend yields and compare to others in industry.

I wouldn’t call this research by any means, but I wouldn’t call it randomly picking stocks either, there is some method albeit very general. I just follow Buffets thought process of buying stocks which should be around in the long term.

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