80% of my portfolio is in Tech. Is it too risky?

Zoox
KMpV45

Go to company page Zoox

KMpV45
Apr 14 31 Comments

I’m in my early 30s and have about 200k invested in stocks. Since I still have age on my side, I want to be a bit aggressive with my portfolio. I firmly believe Big Tech companies will keep outperforming over the next 10 years at least. Also, since I’m from Tech myself, I am more familiar with these companies compared to other sectors. About rest 10% is in ETFs (VOO, SCHD, SPDR) and remaining 10% in non tech (Banks, Costco, Home Depot, Disney etc).
Most of my tech portfolio is in the following companies: Apple, Microsoft, Google, Amazon, Meta, Nvidia, Salesforce, Adobe, PayPal.

Is it too risky?

Edit: If you feel it is risky, please suggest good non-tech stocks or ETFs I should consider in the long term.

TC: 200k, currently single

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TOP 31 Comments
  • Microsoft / Eng
    BigTech88

    Go to company page Microsoft Eng

    BigTech88
    I’m in my 30s also and I think being vested over 10 years in tech is riskier I would lower tech investments to 50% to take advantage of ETF growth. But then again I am not a licensed advisor, just my two sense.
    Apr 14 6
  • Airbnb
    podiatrist

    Go to company page Airbnb

    BIO
    Please do not DM me.
    podiatrist
    If tech bombs then you risk losing your job and your wealth at the same time.

    VTI and VOO are both mostly tech stocks too, so you shouldn’t consider those hedges against tech.
    Apr 14 1
  • OnDeck
    cheeky🐿

    Go to company page OnDeck

    cheeky🐿
    Those are rookie numbers. Take out a loan and go long on Roblox, Etsy, and Twitter. The future awaits you.
    Apr 14 1
  • Splunk
    _cha0s_

    Go to company page Splunk

    _cha0s_
    Dude my portfolio is down 50% cause of this.
    Apr 14 2
  • New
    tigerbl00d

    New

    tigerbl00d
    The thing with having such a huge weight in tech is that you need to know when to pull profit off of the table and re-balance your positions. I don't think it is an absolute mistake to have an 80% allocation in tech if you believe in the sector because, as you stated, you have several decades ahead of you.

    However, this is not the greatest strategy because, as your portfolio grows, you expose yourself to increasing levels of risk as time goes on. Ideally, you want to reduce risk as time goes on.

    I would recommend to have a target amount that you want to allocate towards tech and then, as you start reaching this target, you should start allocating funds in excess of this amount to other investments.

    I would also recommend, if you haven't already, beginning to implement hedging positions using options to reduce the risk that you lose a massive amount of your investment if the tech sector slumps (as it has recently). With such a large percentage of your portfolio in a single sector, you can lose a lot of money very fast, and once you approach a mid 6 figure portfolio, you should be able to easily afford some insurance by buying the appropriate puts.

    I have one account where I am 70% in tech long, and it is down about 40% ytd right now. I have another account where I am in mostly the same positions but I am taking profits as they come and this account is only down about 15% ytd right now. I expect the first account to recover fully over time, but I am running this experiment to test these two strategies over a decade (they are about 2.5 years in). For comparison, my main account is balanced across several sectors (only has about 20% weight in tech) and, with all long positions and hedging, I am up ytd about 6%.

    I expect the tech-weighted accounts to out perform my main account over time, but, as you can see, they can take quite large losses when the market turns against you, so you need to have the risk appetite for that if you want to adopt such a strategy.
    Apr 14 6
    • New
      tigerbl00d

      New

      tigerbl00d
      No, the S&P 500 covers many different sectors and VOO tracks this index so it is quite diversified. It just so happens that most of the largest companies in the S&P 500 (and in general) are tech companies, so that is why you would see that this (and similar ETFs) have a significant weight of tech holdings.

      If you want the Vanguard ETF that is overweight tech, you want to look at VGT. Always read the prospectus of any fund you are considering to fully understand how it is managed and any associated fees.
      Apr 15
    • Google
      edibles

      Go to company page Google

      edibles
      I meant by definition it has too 500 companies and currently that happens to be a lot of tech
      Apr 15