High-Risk Speculative Portfolio with Low Diversification and Strong Tech Focus Suitable for Aggressive Investors

Report created on Nov 25, 2024

Risk profile Info

7/7
Speculative
Less risk More risk

Diversification profile Info

2/5
Low Diversity
Less diversification More diversification

Positions

The portfolio is heavily concentrated in five major companies: Robinhood, Apple, Amazon, Tesla, and NVIDIA. With a whopping 40% allocation to Robinhood, it's clear that this portfolio leans towards high-risk, high-reward strategies. A concentration like this can magnify gains but also amplify losses. Diversification is crucial to mitigate risk, and this portfolio lacks it. Allocating more evenly across a broader range of companies can help balance potential risks and rewards.

Growth Info

Historically, the portfolio has shown impressive performance with a compound annual growth rate (CAGR) of 27.74%. However, this comes with a significant downside risk, as evidenced by a maximum drawdown of 66.15%. This means that the portfolio has experienced substantial volatility, which can be nerve-wracking for investors during market downturns. It's important to consider whether such high volatility aligns with long-term investment goals and risk tolerance.

Projection Info

Using a Monte Carlo simulation, which models potential future performance based on historical data, the portfolio shows a wide range of outcomes. With a hypothetical initial investment, the simulation predicts a 5th percentile return of -40.32% and a 67th percentile return of 3,628.41%. While the median return is promising, the potential for significant losses remains. This highlights the importance of considering both potential returns and risks when planning for the future.

Asset classes Info

  • Stocks
    100%

The portfolio is exclusively composed of common stocks, which inherently carry higher volatility compared to other asset classes like bonds or real estate. This lack of diversification can leave the portfolio vulnerable to market fluctuations. Incorporating other asset classes could help stabilize returns and reduce overall risk. A more balanced allocation could enhance the portfolio's resilience against market downturns, providing a smoother investment journey.

Sectors Info

  • Financials
    40%
  • Technology
    30%
  • Consumer Discretionary
    30%

The portfolio is concentrated in three sectors: Financial Services, Technology, and Consumer Cyclicals, with a heavy emphasis on Technology. Such concentration can lead to increased exposure to sector-specific risks, like regulatory changes or technological disruptions. Diversifying across more sectors could help mitigate these risks, providing a buffer against sector-specific downturns. A more balanced sector allocation can lead to more consistent performance over time.

Regions Info

  • North America
    100%

Geographically, the portfolio is entirely focused on North America. While this region offers many growth opportunities, it also exposes the portfolio to regional economic and political risks. Diversifying geographically can help spread risk across different markets, reducing the impact of any single market's downturn. Considering international investments could provide additional growth opportunities and enhance the portfolio's stability.

Risk vs. return

This chart shows the Efficient Frontier, calculated using your current assets with different allocation combinations. It highlights the best balance between risk and return based on historical data. "Efficient" portfolios maximize returns for a given risk or minimize risk for a given return. Portfolios below the curve are less efficient. This is informational and not a recommendation to buy or sell any assets.

Click on the colored dots to explore allocations.

The portfolio's optimization chart suggests room for improvement. Aiming for the efficient frontier could enhance returns for a given risk level. To achieve a riskier portfolio, consider increasing exposure to growth-oriented assets. For a more conservative approach, adding bonds or diversifying across asset classes may help. The focus should be on aligning the portfolio with personal risk tolerance and investment goals. Exploring ways to balance risk and return can lead to a more efficient portfolio.

Dividends Info

  • Apple Inc 0.40%
  • Weighted yield (per year) 0.08%

The portfolio's dividend yield is relatively low, with Apple contributing a modest 0.4%. This suggests that the portfolio is more focused on capital appreciation rather than income generation. For investors seeking regular income, increasing exposure to dividend-paying stocks or other income-generating assets might be beneficial. Balancing growth and income can provide a more comprehensive investment strategy that aligns with different financial goals.

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