One of my close friends has two stocks in his self-managed pension plan, which is roughly the same size as mine. By contrast, adding up the holdings in the four equity funds in my Sipp comes to 1,736. Who’s right? To be fair, David loves risk. He pushes boundaries — to put it politely — and is a fearsome poker player. Post-Covid, he purchased International Airlines Group and Deliveroo when everyone said we would never fly or order a curry ever again, Well we did and his money doubled.
Still, many investors today look at the prolonged success of some of the biggest technology names and conclude these will outperform indefinitely — be it due to network effects, capital firepower, or whatever. Why not simply own those? Recently this would have been the thing to do. The so-called Magnificent Seven of Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla now comprise a third of the S&P 500’s market capitalisation and account for half its gains this year.