How should you position your portfolio?

Time for Mike on the Money. So let’s take a look at the closing numbers. Wow, yesterday was crazy. This week has been a tough week. Of course, the market is off today to celebrate June 19th. We’re taking a breather after hitting all-time highs this week. You can imagine how people are going to react when they see these numbers. So, let’s take a moment this afternoon to talk about how you should position your portfolio. With all of that in mind, with the information I just gave you, I’m joined by Mike Giordano, Financial Advisor with Williams Wealth Management. Thanks for being here, Mike. So what propelled the market to an all-time high? Well, it all comes down to “market highs.” That rhymes, doesn’t it? Perfect. But one of the interesting things about the market is that there have been two fundamental stories going on over the last year and a half. One is interest rates. Interest rates are rising. We expect that to hurt the economy. It’s going to slow things down and maybe put us in a recession. That’s never a good thing for the market. On the other hand, you have this I-story that started with OPENAI about a year and a half ago, where there’s this expectation that it’s going to boost corporate profits, increase efficiency across the economy, and be good for the market. So you have those two stories. The interest rate story got boring because the economy didn’t collapse. And then the AI ​​story has been driving everything. But AI seems to be concentrated in just a few companies. Do those companies have that much influence across the market? Yes, they do. But it depends on what industry you’re looking at. Not necessarily the Dow Jones, but the S&P 500, which is a broad market that’s weighted based on the size of the companies. So when you go to your favorite pizza place and you buy an S&P 500 pizza, it’s cut into 500 slices. But in the case of NVIDIA, Apple, and Microsoft, it’s three giant slices. They’re going to be New York-style slices that you fold up and eat. So yes, they have a lot of influence whether stocks go up or down. And what’s really interesting about these companies is that for the first time in history, the law of large numbers doesn’t seem to apply. They’re growing at a faster rate than the market, even though they’re huge. It just depends on the technology and how powerful they are. Amazing. So is this concentration in the market a problem for investors? It depends on where you are in your investment journey. If you’re a younger investor, you’re just starting out. You haven’t put a ton of money in the market, but you have a lot of future gains to make. That’s your future investment. Things will stabilize over time, so it’s not as big of a problem. If you’re an older investor, you’re already ready to retire. You’ve put a ton of money in the market, but you don’t have a lot of future investment opportunities to make. That’s when you need more risk mitigation. So you need to start thinking about how to not be so concentrated in a few stocks. Overall, if investors are worried about this, how can they protect themselves? There are a couple of different ways. If you’re worried, if you have the opportunity to have an IRA, a Roth IRA, a brokerage account, there are a ton of investment opportunities out there, and you can actually slice the S&P 500 pie into 500 pieces and buy one that’s all the exact same thing. And you can combine that with a regular S&P 500 fund. And all of a sudden, you’re in a less concentrated situation. Without that opportunity, even if you have a lot of money sitting in your 401K, you can’t move that 41K. There’s not a lot of investment options. But you might have some kind of active large cap fund out there, and you can combine that with an S&P index fund. And all of a sudden, your active fund is a little bit more balanced than the whole S&P 500, so your risk parameters improve. That’s awesome. Okay. So, thanks for your input. That’s awesome, pizza. Well, now you go out and order an S&P 500 pizza. And you say, please give me more vegetables. I can fold it up and eat it. Perfect. I mean, you’re just drooling. I’m drooling right now. I want to go to West 57th Street right now and make us all hungry. Mike Turner, Financial Advisor WI

Mike on the Money: How should you position your portfolio?

Financial advisor Mike Giordano said: Williams Wealth Management Residing in Greenville, South Carolina

Updated: June 19, 2024 5:28 PM ET

Mike Giordano, financial advisor at Williams Wealth Management in Greenville, South Carolina, shares his advice on how to position your portfolio following the S&P 500’s rise to a new record this week.

GREENVILLE, South Carolina —

Financial advisor Mike Giordano said: Williams Wealth Management The Greenville, South Carolina analyst shares his advice on how to position your portfolio following the S&P 500’s rise to a new record this week.