What Dominates Portfolios

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What Dominates Portfolios

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“Most portfolios are still dominated based on what’s been great for the last decade”

Greg Jensen, the co-CIO at Bridgewater was talking about this on the Odd Lots podcast. The last decade has been dominated by U.S. megacap tech stocks. And to Jensen’s point, people are positioned for that trend to continue.

This chart shows the 50 stocks that most frequently appear among the largest 10 holdings of hedge funds. The top five are Microsoft, Amazon, Google, Facebook, and Apple.

Even though tech stocks are now in their deepest drawdown of the last decade, these six are still 39% bigger than they were at their pre-pandemic highs, and 90% higher than they were at the lows in March 2020.

These companies have grown so large that even though this current drawdown is only a few percent more than their 2020 fall, the dollar decline is more than twice as large given how much they’ve gained since then.

Owning anything other than U.S. mega cap tech has looked foolish over the last decade. It’ll be interesting to see if diversification comes back in favor.

We covered this and much more on this week’s TCAF with Carleton English and Rishi Khanna. Hope everybody enjoys the long weekend, and go see Top Gun in the theater.

 

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