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Obviously one way to hedge risk is to use smaller amounts. His gains on that portion are still greater than if it was parked 100% in VTSAX.
by sicp-enjoyer 4y ago
Obviously one way to hedge risk is to use smaller amounts. His gains on that portion are still greater than if it was parked 100% in VTSAX.
- thunky 4y agoOnly if you care about percentage gains more than dollar amounts. Depending on how much meta he actually bought, he may have made more money today with the s&p's 0.22% gain that he's made with meta all time. But meta probably feels like the big winner.
- sicp-enjoyer 4y agoI don't see how that's the case. If he had 95% of portfolio in S&P and the FB he bought was 5%, he still did better in dollar terms than 100% S&P.
- thunky 4y agoWe can't know unless we know how much meta he bought and how much s&p he owns (if any). But 5% is probably much more than anyone should allocate to a single stock. And just to demonstrate my point, he could have bought 1 share of meta a couple months ago for $100. And he could have $1 million in his 401k.
- sicp-enjoyer 4y agoAnd that 1 share still outperformed the equivalent amount of S&P.
- thunky 4y agoRight, but my original point was that no normal person (including OP) dares to take such a risk with a single stock, so in real life there is no "equivalent amount of S&P" in the equation.
- kgwgk 4y ago> But 5% is probably much more than anyone should allocate to a single stock. With the exception of Apple?