Full Article Link: MarketWatch – How much tech stock is too much in your portfolio right now? 7 financial experts weigh in
Quote from Deon Strickland, Ph.D.
“For a passive investor, there really isn’t an easy way to say how much is too much tech. It’s simply part of the structure of today’s market.”
Key Takeaways
Tech concentration is bigger than you think.
The top eight tech companies — including Nvidia, Apple, Alphabet, and Microsoft — now account for nearly 40% of the S&P 500’s value, making it difficult for any index investor to avoid substantial tech exposure. That level of dominance raises questions about diversification and risk, even in broad-based portfolios.
Even diversified funds may not be that diversified.
As Dr. Strickland points out, most passive investors are now heavily exposed to technology stocks simply by owning index funds. If you’re uncomfortable with the idea that a few companies are driving much of your portfolio’s returns, it may be time to take a closer look at what’s under the hood.
Growth vs. value is a practical rebalancing tool.
For investors looking to reduce their tech exposure, Dr. Strickland suggests separating broad indices like the S&P 500 into growth and value components. “A reasonable approach is to look back at the S&P 500’s historical balance between growth and value over the past 20 years and use that as a guide,” he advises.