Should You Be 100% Invested In Stocks?

Money For the Rest of Us

J. David Stein

Investing, Investing Podcast, Business, Economics, Economy

4.5 • 1.4K Ratings

🗓️ 29 May 2019

⏱️ 33 minutes

🔗️ Recording | iTunes | RSS

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Summary

What are the pros and cons of having your entire investment portfolio invested in stocks versus a multi-asset class portfolio.

In this episode you’ll learn:

What are some investment options if you want to be 100% invested in stocks.
What attributes do you need as investor to have an all stock portfolio.
Why it is difficult for active managers to outperform.
Why an all Japanese stock portfolio has severely underperformed for 25 years and how it is possible a U.S. stock portfolio could suffer the same fate.
What are the pros and cons of a multi-asset class portfolio.
Overview of The Simple Path to Wealth by J.L. Collins
Overview of Investing at Level 3 by James B. Cloonan

Thanks to WIX for sponsoring the episode. You can find show notes and more info on the episode by going here. You can learn about Plus Membership here.

For show notes and more information on this episode click here.

[0:19] Can investing really be as simple as investing 100% of your portfolio in stocks?
[4:16] Can diligent analysis actually outperform the index?
[8:50] Understanding the difference between risk and volatility.
[14:24] Knowing the risks associated with investing 100% in stocks.
[19:17] The influence of the crowd and the misjudgments of investors on the market.
[23:25] The benefits of diversifying your portfolio.
[26:43] Investing 100% in stocks is viable, but it will come with ups and downs.

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Transcript

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0:00.0	Welcome to Money for the rest of us. This is a personal finance show on Money, How It Works,
0:05.8	How to Invest It and How to Live Without Worrying About It.
0:08.7	I'm your host David Stein. Today's episode 254. It's titled, should you be 100% invested in stocks?
0:18.4	I recently received an email from Matt, he's a listener and a member of Money for the
0:24.2	rest of us plus. He wrote, I have a few ideas for some potential future topics.
0:30.0	One deals with your take on a book called The Simple Path to Wealth by J.L. Collins that is promoted
0:37.6	on many of the blogs and podcast in the financial independence community. I read the book and began investing in simple
0:46.1	index funds as recommended. However, I was never comfortable with putting all my eggs in
0:52.1	one basket, as the book suggests.
0:54.0	What is your take? Can investing really be that simple?
0:58.0	Or is this just a better-than-nothing approach to investing for people
1:02.0	who are not interested in actively managing
1:04.8	their finances. Yes investing can be that simple. You can put a hundred percent of
1:10.4	your portfolio in an index fund or EDF, a stock EDF. of your
1:12.8	E. T. F. A stock E. T. T. T. T. T. T. T. T. T. T. T. T. T. T. S. A. A. T. S. A. A. T. S. A. A. T. S. A. A. points out it has 3,600 holdings. You're effectively investing in every publicly traded
1:26.9	company in the US and your fortunes are tied to the ingenuity of the people working at those companies as they deal with the many
1:34.7	complexities involved in the world and had you invested in that particular
1:39.1	index or fund over the past 25 years you would have done very, very well.
1:45.0	Now you don't necessarily have to just do an index fund.
1:49.0	There's always a question of maybe invest in a basket of individual securities. I got an email out of the
1:58.3	blue from somebody that calls himself Yerke. He wrote,
2:02.5	For Jack Bogle, buy and hold is eternal.
	...

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