Financial Advisor News

Piedmont, CA

Financial Advisor News

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Piedmont, CA

by: ALISON VAN DYKE

FIRST AND MAIN FINANCIAL

(510) 601-1935

Oakland, CA | East Bay; Financial Planning for Tech Dominating the Stock Market

How to Plan Appropriately—

Hi, I’m Erik Wolfers. I’m the managing member of First & Main Financial. We’ve been helping clients achieve financial success since 2001. Today I want to talk a little bit about large stocks, or the largest stocks.

We’ve had for some number of years now the Fang Stocks: Facebook, Apple, Amazon, Netflix and Google. Microsoft is also stock that’s done quite well for a long period of time. Tesla right now is rocketing to new highs.

This is not the only period in history where a small number of stocks have dominated the news and excitement and innovation. There have been periods in the past where other companies, other names, have dominated and they’ve made up the largest share of the stock market cap weighting in the US Stock Market. Companies like General Electric and General Motors and AT&T are some of the names from the past that were innovators and on top for some decent period of time.

Some of these stocks I think (and I’m speculating here) are just enjoying phenomenal amounts of participation and momentum based on the feeling or the sense that these companies are going to dominate and be the best forever—it’s possible. We do have clients that held individual stocks for a long period of time and have made lots and lots of money on them, and then they do have some other holdings that haven’t made quite as much money. As humans we always want to attribute success to the whole portfolio instead of the actual returns or performance of the portfolio.

But if we look at dominant stocks in historical terms: when a stock becomes one of the top-ten biggest stocks in the stock market, for three years following on average it continues to outperform stock market by a little bit (less than one percentage point), and then for the next five and ten years, stocks have historically underperformed the rest of the stock market, once they’ve joined the top-ten list.

We don’t know what the future holds and maybe it’s different this time. It’s always possible that something’s different, but historically speaking companies that have dominated and gotten to an enormous size have not been able to maintain their dominance.

It’s interesting, potentially, to participate in some of these names, especially companies that you believe in, or products and services that you use, but concentrated bets in a small number of stocks over a very long period of time, a lifetime of investing, may not give the results that one hopes for.

I have a report if anybody wants to see it, that was produced on this, please feel free to contact me.

If you are looking for some financial guidance; whether for a one time financial plan or continuing advice on your investments, we invite you to meet with a First & Main Financial planner for a free consultation. We would be more than happy to sit down with you, assess your situation and review our services to help navigate your financial future.

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East Bay Area: Piedmont, Oakland, Berkeley, Alameda, Orinda, CA

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Recent

“Best Financial Advisor in Piedmont, CA”

Top Rated Local Financial Advisor / Planner

East Bay Area: Piedmont, Oakland, Berkeley, Alameda, Orinda, CA

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BIO: At First & Main Financial, Alison Van Dyke helps clients with their financial lives. She has worked in Corporate Finance for Bank of America and Chase Manhattan Bank. Alison is pursuing the CFP® certification; she received her MBA at Georgetown and her B.A. in Political Science from UCLA.

235 Wildwood Avenue,
Piedmont, CA 94610, USA

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BIO: At First & Main Financial, Alison Van Dyke helps clients with their financial lives. She has worked in Corporate Finance for Bank of America and Chase Manhattan Bank. Alison is pursuing the CFP® certification; she received her MBA at Georgetown and her B.A. in Political Science from UCLA.