High-Risk Speculative Portfolio with Significant Exposure to GameStop and Limited Diversification

Report created on Jul 8, 2024

Risk profile

  • Secure
    Speculative

The risk profile, derived from past market volatility, reflects the level of risk the portfolio is exposed to. This assessment helps align your investments with your financial goals and comfort with market fluctuations.

Diversification profile

  • Focused
    Diversified

The diversification assessment evaluates the spread of investments across asset classes, regions, and sectors. This ensures a balanced mix, reducing risk and maximizing returns by not concentrating in any single area.

Positions

This portfolio is heavily concentrated in GameStop Corp, making up 67% of the total allocation. The rest of the portfolio is spread across a few other stocks and ETFs, with NVIDIA Corporation being the second largest holding at 20.5%. This single-focused nature means that the portfolio is highly dependent on the performance of these few assets. Such concentration can lead to high volatility and risk. To mitigate this, consider diversifying across more assets to spread the risk and potentially stabilize returns.

Growth Info

Historically, this portfolio has shown impressive performance with a CAGR of 58.34%. However, it also experienced a significant max drawdown of -53.52%, indicating high volatility. The fact that 90% of returns came from just seven days further highlights its speculative nature. This performance suggests that while there are potential high returns, there is also a substantial risk of loss. To improve stability, consider balancing high-risk assets with more stable investments to cushion against potential downturns.

Projection Info

Using a Monte Carlo simulation with 1,000 iterations, the portfolio shows a wide range of potential outcomes. The 5th percentile indicates a potential loss of -66.97%, while the 50th percentile suggests a gain of 1,652.26%. The optimistic 67th percentile projects a return of 4,798.65%. This simulation underscores the portfolio's speculative nature, with high potential returns but significant risk. To align with a more stable financial goal, consider adjusting the asset mix to reduce volatility while maintaining growth potential.

Asset classes Info

  • Stocks
    95%
  • Cash
    3%
  • Other
    2%

The portfolio primarily consists of common stocks, making up over 95% of the allocation. With minimal exposure to other asset classes, the portfolio's risk is heightened due to lack of diversification. Stocks are inherently volatile, and a downturn in the stock market could heavily impact the portfolio's value. Introducing other asset classes such as bonds or real estate could help balance the risk and provide a more stable income stream, particularly in volatile market conditions.

Sectors Info

  • Consumer Discretionary
    67%
  • Technology
    27%

The sector allocation is heavily skewed towards Consumer Cyclicals and Technology, with these two sectors comprising over 93% of the portfolio. Such concentration exposes the portfolio to sector-specific risks, which can be significant if these industries face downturns. To mitigate these risks, consider diversifying across a broader range of sectors. This could help protect the portfolio from sector-specific volatility and provide more consistent performance over time.

Regions Info

  • North America
    95%

Geographically, the portfolio is overwhelmingly focused on North America, accounting for over 95% of the allocation. This lack of international exposure can limit the portfolio's potential to capitalize on global growth opportunities and increase vulnerability to regional economic downturns. Expanding geographical diversification can help tap into emerging markets and developed economies alike, spreading risk and potentially enhancing returns.

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 could be optimized by moving along the efficient frontier to achieve a better risk-return balance. Currently, it holds a high-risk level, which can be adjusted by incorporating more diversified assets. This could lead to a more conservative portfolio with lower volatility, or alternatively, a riskier one with higher potential returns. Before optimizing, it's essential to address the concentration and correlation issues to create a solid foundation for future growth. Balancing risk and return effectively is key to long-term success.

Dividends Info

  • ProShares Bitcoin Strategy ETF 46.10%
  • JPMorgan Equity Premium Income ETF 7.00%
  • JPMorgan Nasdaq Equity Premium Income ETF 9.40%
  • Weighted yield (per year) 2.32%

The portfolio's overall dividend yield is relatively low at 2.32%, with notable contributions from the ETFs, particularly the ProShares Bitcoin Strategy ETF at 46.1%. While high dividends can provide a steady income stream, the focus on speculative stocks may not prioritize dividend payouts. To enhance income, consider incorporating more dividend-focused investments. This could provide a more reliable cash flow, especially during market downturns, while still allowing for growth potential.

Ongoing product costs Info

  • ProShares Bitcoin Strategy ETF 0.95%
  • JPMorgan Equity Premium Income ETF 0.35%
  • JPMorgan Nasdaq Equity Premium Income ETF 0.35%
  • Weighted costs total (per year) 0.05%

The portfolio incurs costs mainly from the ETFs, with the ProShares Bitcoin Strategy ETF having the highest expense ratio at 0.95%. Overall, the Total Expense Ratio is relatively low at 0.05%, which is beneficial as it minimizes the drag on returns. Keeping costs low is crucial for maximizing net returns over time. Regularly reviewing and optimizing for cost efficiency can help ensure that investment gains are not eroded by high fees.

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