John, good to see you. Today we are talking about the concentration risk lurking in your portfolio. A lot of investors have large positions in S&P 500 index funds or in mutual funds that use the S&P as a benchmark. And stocks are up quite a bit this year, which is good news for your portfolio. But I think a lot of investors don't realize that 80% of those gains that we're seeing this year are due to only 10 stocks. What's going on here?

Yeah, and, you know Erin, this isn't a new thing. This has happened quite often over the last four or five years really, that we're seeing the big, The Big 10 as they’re called: Amazon, Meta, Google and so forth. They’re really carrying the S&P 500. And you mentioned earlier that a lot of investors, whether they have these actual investments, these stocks or they have the ETF or mutual funds with these large-cap growth, you know, people feel comfortable with the S&P 500. America has always been a financial powerhouse and the problem that a lot of these people are getting themselves into is they are heavily constrained in S&P 500 indexes or companies, and if these 10 companies were to to struggle and decline, then the S&P 500 is going to fall with it. And we saw a lot of that in 2022 some of the major hits.

Right. So just to put this into perspective, we haven't seen these concentration risks in 50 years, since 1973. So what risk does this present?

Well, it's it's over-concentration and lack of diversification, it is something that I preach to everyone that comes into my office, my clients especially. You must diversify. And this is a staunch academic principle when I took my advanced investment course through the private wealth Advisory Program at Yale University. The number one thing they tell you is that you must use proper diversification, for, unfortunately for a lot of people, that just means stocks and bonds, and we know how that happened. You have a 60/40 portfolio in 2022. It goes way beyond that, folks you need to have, you know, not only stocks and bonds, you have to have different caps, international, you have to have low volatility. You have to be broadly diversified. So if those big 10 did collapse, you're not going to collapse as hard with them. And lastly, you need to, especially in today's day and age, you need to look into some alternative investments.

Right and we're gonna get into those in a second because I know you have tips to manage any volatility, you touched on it already. But first, you just need to reduce concentration.

Absolutely. You cannot have too much concentration in one fund, one ETF or one mutual fund or one stock.

So now let's talk through some of those alternatives. And the first would be hedged equities or Buffer ETFs.

Yeah, and these have worked very well for us since 2022. When we started seeing a lot of the bond risk and we moved our clients out of heavier bond holdings. And some of these Buffered ETFs give our clients access to a participating upside in the S&P 500. But the ETF itself is designed to, to reduce some of that risk exposure in the event those Big 10 do drop, we are reducing that exposure on the downside.

The other thing that we have also done, is structured or flash notes, and you know, these investments are negotiated with some of the largest banks in the world. And again, they have a focus on downside risk reduction. And some of these notes do offer principal protection when it comes to market risk, which is really huge in the last couple of years of volatility that we've seen. It’s really provided our clients with less stress in volatile times, which is always important.

So glad we get to talk this through, do like a little peek under the hood and understand what's going on here. John, it's been helpful. If somebody has questions to find out if they are properly diversified, what's the best way to reach you?

Yeah, well, you can always visit our website, www.gosecurus.com. We have a wealth of information there, and podcasts videos. And while you're on the website, you can visit the Contact Us tab and from there, you can schedule a 15 minute phone call where we will answer any questions, or a complimentary one hour vision and clarity consultation. And if you like doing things the old fashioned way, you can give us call the office at 858-935-6210, ask to speak with Emily and she will get you on our schedule.

All right, John, thank you.

Thank you, Erin.