The Jon Sanchez Show
08/16- How to know if your portfolio is diversified.
Hey there, it is Ryan Seacrest with you. You wanna make this summer unforgettable? Join me at Chumba Casino. It's this summer's hottest online destination. They are rolling out the red carpet with an amazing welcome offer just for you. So don't wait, dive in now and play hundreds of social casino games for free. Your chance to redeem real prizes is just a spin away. Here to join me. - Sponsored by Chumba Casino, no purchase necessary. VGW Group, void were prohibited by law. 18 plus terms and conditions apply. - Come with a John Sanchez show on your stock, 780K OH. It's a pleasure to be with you. TGIF, Mr. Gone of Sanchez Wealth Management. How many exclamation points? I'm gonna throw it right to you. How many exclamation points will we put after this TGIF? - I say one really big one 'cause it was a nice green week. Do we have a down day this week? I mean, maybe you're-- - I don't think we, I'll answer that 'cause I tracked that but, yeah, that's a good question. That's a good question. I don't think we did but I'll double check it. - And the performance tool I think was all green every day. So yeah, I mean, this highlights, sorry, this highlights the, you know, kind of run towards the store when it's on fire methodology that we've talked about before, you know. But yeah, I'm happy it's Friday but I'm in a better mood this Friday than I will, Fridays in the past. The markets are not as heavy. - Good, good, glad to hear that. Yes, if we use the S&P 500 as our barometer. Yeah, we did not, well, let's use it 'cause we actually had one day where the S&P was unchanged. That was the beginning of the week. So, all right, Tuesday, excuse me. But yeah, everybody, the rest every other day was positive. So, yep, it's not bad, not bad. All right, let me tell you what, Jason, I have lined up for you this Friday. Of course, on a Friday, we used to talk about anything, right? We just kind of bebop around. We call it the Smorgas board. Just eat off of this plate, eat off of that plate and figure things out. So what we're gonna follow though in more discipline correlation is the following. So, Jason was just mentioning what a great week it has been. So, if there's one thing that we have learned and let's go back the last couple of weeks, Jason. Obviously, when we had the tough week after the carry trade meltdown as we're calling it. And of course, this week, where we've had a great week, we need to think about something. And that is diversification in a portfolio. Now, I know this can be somewhat of a, I'll call it kind of a boring topic, but really it's not, it's one of the most important topics that we ever discuss with all of you. So, whether it's a declining stock market that we experience, or again, a rising market like we experienced this week, there's something that you can do. And this is the time to do it. When things are good right now, this is when you wanna do that. And what we're gonna call this is a self-test to determine if you are properly diversified. Now, it's easy to talk about diversification, the importance of it, like, you know, when we had that 1,000 plus point loss a few weeks ago on that Monday, due to the carry trade, as I said, it's hard to do it. And most people are like, eh, get to this later. When things are good, like they are right now. But this is the time that you wanna be performing these tests, right, Jason? - Absolutely, yeah. I mean, when your head's a little cooler, it makes a lot more sense to see how things went, versus trying to figure out what the heck's going wrong when markets are acting goofy. Yeah, it's like anything. - That's awkward, that is. - Buying insurance when you, you know, when you don't need it versus wishing you had it. - Yes, yes, exactly, exactly. So, we're gonna go through some talking points with you this evening to talk about how you can perform a self-test to see if you are properly diversified. Because again, it's not gonna always be as good as it is right now, folks. And again, this is something you need to be doing now while the times are good. Like Jason said, cool, heads will prevail and you'll make a much clearer decisions and really self-analysis of how this is, how your portfolio, your 401K, your IRAs, et cetera, are performing. So, again, fun topic for a Friday. Let's get down to what happened today, speaking of fun, take it away. - Yeah, I mean, today was, I'm very happy to announce that we got yet another green day in markets. Not a whole heck of a lot other than, I think the housing start number left people a little bit concerned that things may be slowing backward booking rates have come down quite a bit over the last, you know, week or five. But this is a July number, building permits also a little bit less than folks would like to see, but University of Michigan consumer confidence was in line and the inflation data continues to come down. So I'm gonna, at least for now, think that the housing data was potentially a blip, given storms and so on and so on. - Yes, exactly. - Across the country. But, you know, I think that today was sort of one of those days that was happy to see, remember, as go Friday, oftentimes tells you a decent amount about what consensus and overall is telling you, when you see big selling on a Friday, oftentimes that can be symptomatic of folks worried about geopolitical, et cetera, over the weekend. And then a day like today, we're kind of calm and that volatility continues to come down. And we're talking to you and I, we're talking about vol in general today offline and how much that really plays into all sorts of positioning, right, higher volatility created the need for some of the systematic community to deleverage their portfolios. And many of the teams that I watch that we currently use for our clients, they've yet to re-enter, right? Even though vol has started to come down, it's more of average level. So that big spike caused de-risking and you haven't had that cohort get back in. And so I say that intentionally because if the markets continue to be calm and you see this slight trend higher, which we have over the last two weeks, they're gonna have to re-address their positioning and get back to more of a neutral stance 'cause they're actually under-invested and you also have a massive buyback now starting for the next several, you know, two months or so that was on the sidelines during those early part of August, late part of July, which as we've talked about tends to be a weaker time of the year. So I think, you know, today was kind of, I'd hope to see a nice, you know, green err day, nothing crazy like people panic chasing the tape, but after a day like yesterday, to see a red day would have been unfortunate, but nice whole follow through and I don't think anything really derails that until you get a little bit of economic data next week. We'll get FOMC minutes. We've also got Jackson Hole coming up here pretty darn soon where the Fed may lay the groundwork for what it looks like to cut interest rates, but that'll be a little bit farther down the line. - Yeah, absolutely, great summary. Yeah, weekly numbers were phenomenal. Here's how we did. Russell 2000, the small caps, the little guys, finished up the week 2.93%. S&P gained 3.93%. Dow 2.94, and our star of the week was the NASDAQ with a 5.29% gain. I think about this, Jason, I always like to say this. Now it's kind of apples and oranges, so I say this jokingly 'cause it's a Friday. We can joke a little bit here. You know, you can go buy a one-year CD right now is looking this up for a client this afternoon. Go buy a one-year CD right now. National rates average right around 5%. Or you can just invest it in the NASDAQ for one week and make more than that. - And that's something to that part of the CDs, right? People are looking at that and remember, when you're looking at a CD rate versus buying your favorite treasury or something along those lines, CDs renumerate you for that illiquidity. What the heck am I saying? In order for them to keep your money locked up for a year, they're offering potentially half a percent higher than where a one-year bond would typically trade. And so the bank knows they have your money, but if you need your money, there will be a cost to that. And so you need to sort of manage your liquidity appropriately. Instead of folks who get sometimes locked up, I'm gonna put everything in this CD. And if you need it, you're in a tougher spot. So allocate to investments to savings accounts that could be your emergency liquidity. And then anything that you have a good idea thinking that you're not gonna touch, then yeah, seek out higher yielding instruments if you're looking for low risk, like I mentioned CDs or bonds or things. And along those lines, I'll give the same advice to all of you that I give to our client. And that is their situation was somewhat unique. They have other investments, of course, but they recently sold a house and they're gonna get the proceeds a few hundred thousand dollars, but they plan on buying another house but in about a year from now. And so they ask me, what should we be doing this money? And so keep this in mind, depending upon what the usage is of your liquidity, right? You have to say, okay, do I need to get my hands on it right away as Jason was mentioning? Can I tie it up for a little bit, what's the parameters? What are the goals for this money? Well, in their case, as we always tell our clients, if you know you need this chunk of money for something in the future, and I'm talking like saying the next one to three years, do not invest into the stock market. Sure, you're probably gonna make some more, but what happens if you don't? And in their case, they need this money available in about a year to put down or go build a house for cash. And so as I told them, we shopped around, we looked on the national website, bankrate.com, shopped around, saw what the national CD rates are, and I said, okay, here's where you are, about 5%. My recommendation is you're gonna need this money about a year, lock in a one year CD. I said, if by chance something happens where you have to get your hands on it before the one year maturity, sure, you're gonna pay a little bit of penalty, meaning loss of interest. But for the most part, you're gonna do pretty well. But the point I'm trying to bring to everybody is, folks, there is a 100% probability we're at least going to get a quarter percent cut in September. Now, if you've never lived through an interest rate, declining cycle, keep in mind that literally minutes after the Fed makes that decision, even though it's what we call the Fed funds rate, when they say, oh, we've cut rates a quarter percent, this is the rate that banks charge one another to borrow money, but all other lending institutions and types of loans look at what the Fed is doing. So what you'll see happen literally within minutes in most cases, and I don't think this will be any different, if the Fed does give us this quarter percent cut, or maybe it's a half as some on the streets say, but I think it's gonna be a quarter, you'll see the prime rate. What's that? - I'm sorry, it's not emergency. - Not emergency, not emergency, I deserve it. I still got plenty, I got almost a month to make my prediction cut. - Oh, so it's any one of the times in between? - Yeah, so I said before, I said before the Fed, September 18th meeting. - Okay, okay, all right. - Go ahead, clarify it. But yeah, you bet. But depending upon what the use of that money is, that's what you wanna look at. So my point is, if you know that you don't need to really touch this money in the next year, I would absolutely lock into a one-year CD, because back to my point, when the Fed cuts rates on September the 18th as the street anticipates, you'll see prime rate drop immediately. And when prime drops, you will see CD rates drop immediately, unless there's some special floating around. So keep that in mind that again, it's probably not gonna get any better than what we have right now, if you're looking around for CDs. And then as we always tell clients, yeah, we can do them, but always tell clients, shop around, right? This is something that you can pick up the phone or look on the internet, call your favorite bank, your favorite credit union, your favorite broker, whatever you wanna do, shop around. And keep in mind, there's nothing wrong these days. Jason, you've been a big advocate for our clients with, I can't say the name, but well, no, with one bank that offered pretty good high yield savings. - Oh, yes. - And things like that. But that's on the internet. And you don't need to worry about investing over the internet as long as you're with one of these big names, but because they're all FDIC insurers. So it doesn't matter if you go to your local bank or credit union, or you go online and open an online CD or something like that. As long as it's FDIC insured, it's all the same. So keep that in mind, rates are gonna come down, you'll see CD rates come down. And if you think you can lock up some money for a while, your liquid, your emergency money like that, then that would be a place to do it. But again, do it soon. All right, we'll continue our market discussion. Let's turn it over to Kristen Snow on this fine Friday. Happy Friday to you, Kristen. Welcome back to the John Sanchez show on new stock 780KOH. It's with Jason Connell, Sanchez wealth management. All right, somewhat of a lackluster day today, but we finished in the green. And as I indicated with the weekly performance, very strong, let's go to today. We finished up 97 on the Dow, a 0.24% gain to 40,659. Now as that grows, 37 points, 0.21% S&P of 11 are 0.20%. Oil was a big pullback today, 3.4% loss, 75.53 a barrel. So hopefully that holds and we feel good at the pump. Jason, strong day for gold, $45.40 rise, 2,537.80. What the heck happened on this one in your opinion? - Just the trend is your friend, right? I mean, kind of broke him through that old highs at 24 or 50-ish level and just decided to continue to turn on. There were some comments out that China re-began their buying, however you want to say. - We started the carry trade? - Yeah, right, not the carry trade, yeah. Exactly. - That was the deadline today. That was one of the highlights today. But that the carry trade's back on or that they're shorting the end of my gold. - I don't know, hopefully not that part. But yeah, no, but there was some headlines on Reuters yesterday that they had sort of re-instituted across their banks that they're back adding to their gold holdings. And I think that got all the gold bugs all frothy and it's a two plus percent today, but silver, same thing. Keep an eye on both of those. Very nice trends in both of them. - Indeed, indeed. All right, and then as far as the bottom market was concerned, I've finished on four basis points for the day, a 3.89% loss on that yield. So pretty nice number there. All right, let's get to our topic. Self-performing a self-test of your portfolio to see how you're doing as far as diversification is concerned, right? People kind of get into a slumber when times are good like now. And they go, eh, you know what, portfolio's doing fine. I don't need to kind of do the self-analysis and see where I am. But as we said at the last segment, this is the time that you want to do it. You want to do the self-analysis and see if you are truly diversified so that when the times do get tough, you are ready. You're not trying to figure this out and make decisions as the market is falling. So let's go to our first point tonight, Jason. We need to analyze our asset allocation. Now keep in mind, folks, when we talk about that, there's different types of assets, right? We have assets that can be classified as stocks, bonds, real estate, commodities. I mean, you name it, there's a bunch of different asset classes. So a well-diversified portfolio is typically going to include a variety of asset classes. Jason, you say something when we ever have this discussion that I think is just a wonderful scene. And that is, if you have a portfolio that goes all up in one day or all down in one day, that's your first failed self-diagnostic test that your portfolio is not diversified. So that's why we want to have these different asset classes. - Yeah, I mean, trying to have things that are, you know, not necessarily moving in the same direction is helpful. Yeah, we want everything to go up. But, you know, I would rather take a portfolio that has names that go up and down and up and down and on average, the whole portfolio continues to trend higher versus something that, you know, when tech's doing well, you're doing amazing and so happy and when tech's getting destroyed, you're crying and unhappy and scared and so on and so forth. It's just, it depends on your personal age, risk tolerance, all those buzzwords that we always like to use. But, you know, if the goal of the portfolio is long-term growth and trying to take out some of the day-to-day ebbs and flows that may cause you angst, yeah, adding other strategies than just tech stocks to a portfolio is gonna be very helpful over time. - Absolutely. All right, now, when we talk about adding diversification among different asset classes, like stocks, bonds, mutual funds, commodities, so on and so forth, we now need to think about, well, how much do I add to each of those? And first of all, there is no magic formula, right? You've heard, all of you have heard if you've been around for a while, hey, I need to do a 60/40 allocation or hey, how much do I have in the stock market? Or should I have in the stock market? Well, let's take the number 100 minus my age and therefore that's what I should have. All BS, right? Those days are gone. You don't need to do that. To Jason's point, you got to look at your personal circumstances. We have some clients in their 70s and 80s that still are very aggressive investors. They can afford to be because they have assets that are not related to the stock market. But if your whole net worth is tied up in the stock market, yeah, you probably shouldn't have a significant portion of your allocation in the stock market. So don't fall for the trap of the 60/40, 60% stocks, 40% bonds. Again, those days are gone, in my opinion. Let's go to number two. - Go right ahead, fire. I'd love to hear it. - Sectors, your favorite area. I'd like to sector exposure. Let's start off by enlightening everyone about how many sectors we have out there. - Well, I mean, 11 GIC sectors, right? So you've got all of those, many, many, many we talk about. Sectors are performing important for where are we in the economic cycle, right? Certain areas of the market will work better during times of the economic cycle, right? Consumer discretionary stocks, real estate, industrials. Those tend to do better in early cycle times when you've had your washout and the economy's back on its footing and it's starting to grow again. Or on the flip side, what are good late cycle stocks? Energy tends to help a little bit when you get some rise in inflation, utilities, consumer staples. So there's parts of an economic cycle that may make sense to own certain areas because you're trying to get exposure and/or defensive characteristics that those sectors provide. Utilities is a perfect example. It's done very well this year. People hide behind it and say, "Oh, I'm trying to buy utilities." As a backdoor way to get exposure to AI because they're going to need all this power and so on and so forth and that's fair. But it's also the fact that interest rates have been plummeting and what do utilities do, John? They pay. - Nice to do this. - Exactly. And so that's why people also have been flocking to those areas in the market is because they're yield chasing. Just like everyone was so excited to get a five handle. Like we said earlier on their treasury positions or CDs, whatever, that time is going to be over soon. You need to start searching for other areas that can get you the lowest risk for that type of yield. And so those are diversifiers inside of an account. Again, love to have growth, love to have all those areas but you got to think of what tends to be a counterbalance. Utilities oftentimes can be a counterbalance to tech because of when those names work in the cycle. Lower rates help tech. Higher rates can help hurt tech, right? You need to think of how do those two work together. Maybe they have some correlation effects. Like I said, lower interest rates. People will buy utilities. So maybe they actually do not diversify each other as well as you think. So not to get yourself in a round and round but you want to think of what are the inputs to your investments and your portfolios and then how do you try to dampen them with other sectors or strategies to keep that diversification. - When we come back, I want to stay on the sector side for just a little bit. We'll give you some ideas of how you can participate in sector allocation, right? Using ETFs and then we'll talk about sector limits and then we'll go on to our third point. Let's turn it over to Greg Neff. He's got news traffic and weather. Hey, Greg. - On Sanchez showing new stock 780Kaways with Jason Gump. We finished up 97 on the Dow. The Nasdaq rose 37, the S&P higher by 11. Hey, if you don't have anything to do tomorrow or any day, matter of fact, except Sundays 'cause they're closed on Sundays. Go see my friends over at S&W, a tractor, stand on the crew. If you are in need of a tractor, check out the Coyote. The big ones, the small ones, everything in between all the implements but most importantly, something you're going to find is nowhere else. And that is the expertise of the staff at S&W Tractor. They can show you, build for you, and also don't forget, zero percent financing. They'd love to show you that side of it. Were they located? How about 4880 East Nylon, Carson City? They're online at s&wattractor.com and the phone number's 882 1225. All right, once again, a good session today but really a great week. We finished up 97 on the Dow. The Nasdaq rose 37, the S&P higher by 11. All right, we're talking about how to do a self test and see if your portfolio really has diversification. And we left off with the sector side of things. Now, we were talking about again the sectors. Now, we have 11 sectors that comprise the S&P 500, right? So, Jason, let's kind of talk about, I've got the numbers in front of me, I didn't for warn you, so I don't expect you to know these but knowing you, you probably do. As far as the breakdown. So, are 11 sectors of the S&P, information technology, 13%, financials, 14, healthcare 13%, consumer discretionary is 10, how big did you say information technology was again? 13, that's out of four days ago. Not 30 something? No, they're showing 13. All right, keep going. I know, I thought the same thing. I thought, if that's user right around 21, 22% or something. Yeah, yeah, that seems low. Okay. Anyway, that's the challenge. And then we got industrials, materials, energy, communications, services, utilities, real estate, and consumer staples, right? So, 11 sectors. Now, let's enlighten everybody, Jason, when we're talking about sectors and diversification. This is a really effective way for those of you that don't want to get real crazy with your portfolios to figure out how do you get sector diversification? And again, in our opinion, you can do it with mutual funds, our favorite are ETFs. But how you can build a portfolio, what we call a core satellite utilizing sectors of ETFs that represent the sectors I just mentioned, that is your core and then getting the satellites, kind of little moons floating around out there, of whatever you want to use, certain stocks, et cetera. Well, yeah, I mean, going back, the S&Ps are obviously, the funny part of the S&P is it's actually very much a momentum index, right? So, the things that are working get bigger, right? It's a market cap weighted index. And so, if it's a weight inside of the S&P 500 and it keeps getting bigger, it becomes a larger weight inside of the S&P. It's really just how big is this company in terms of shares outstanding times current price. And so, the S&P, for example, is a good ballast or core. And then, if you wanted to pick either other sector ETFs or single stocks if you went inside of your portfolio, sort of think of what the weightings are of the S&P. And then, you can either augment it, which is part of what we like to do here as an AI. I own the S&P, but energy's only a 3.8% position. I want a 10% position in energy. You don't go by a 10% position in energy. You really don't need to be like, you know, 6%, 7%. And those are things to be conscious of too. And so, you can, if it's just sectors that you're focusing on, that's a great way to tilt inside of your portfolio. And you've talked about this a bunch of times too. If you go by a bunch of mutual funds, watch out for the overlap effect, right? Where they have, they may all have Apple inside of them and you're like, you know, before you know it, turns out your portfolio is way, way bigger in a specific name because everyone's betting that position. So, you know, those are at least ideas of a core satellite type strategy, is have your core in an S&P holding or those are even more diversified in a global like ACWE, which is all country world. And then, yeah, you can overweight US or underweight emerging markets or do whatever you want, but have a, you know, sort of area you go back to. And the S&P is a wonderful spot for that people use for their core all the time. - Now, speaking of asky, asky, asky, we can talk about geographical diversification. Now, a lot of people shy away from international investing and I don't blame you, it's a- - You've been right. - It's a 14 year? - Yeah, it's an ongoing joke. For those of you that have really, Jason always loves international. I hate it and I just, I don't know. - It's been right to not be. Definitely underperformed. - Yeah, well, at some point, you'll be right. We'll laugh about that one. - And be wrong, right? We should talk about that, right? If you're not right long enough and then you're right, you're still wrong. - Exactly, exactly. But geographical diversification report is very difficult. Now, of course, it's a much easier way to go now. Again, with ETFs or mutual funds, there's a lot of great international mutual funds out there. But buying individual stocks on an international basis highly not recommended because there's different, we have what we call ADRs or American Depository Receipt. So it's a version of the stock that trades in its home country. So if it's a Chinese stock, the ADR, what we see here, like, I don't know, let's say Alibaba, right? That's an ADR of the stock. It trades, you know, supposed to trade pretty close to what it's doing in the home country, but sometimes there's not. But the bottom line is, when it comes to geographical diversification, I always emphasize this. If you want diversification geographically, leave it up to the professionals. Don't try to pick individual names yourself because there are so many, you have your normal risk of being in the stock, normal risk of owning a stock. But then you add to that the geographical risk such as geopolitical tensions, currency. I mean, so many different things that can go on that you have no idea or no control over. And before you know it, again, you can wake up one day and go boom, I'm down 25% and you don't even understand the reason why when the stock market may be up. So just keep that in mind. You should have some international exposure. Again, our waiting kind of varies based upon what's going on and what we see in other parts of the world. But it is a challenging area to invest in always. - It is, I mean, you mentioned too, right? The ADRs typically are supposed to track the underlying holding, unless they don't. It depends on the country. UK based, you know, sort of normal developed world, ADRs will often track what the local is doing, but you've also got the currency effect as well, right? We've talked about this before with the carry trade where you sell dollars by, you know, or sell yen by dollars by US bonds. The flip side is when you're buying a Japanese security, for example, and own the local, you're selling dollars buying yen, buying Toyota, right? And so you've got currency effect and you have performance effect. Some ADRs are not what it's called fungible, which means they don't track the local. Taiwan Semi is a perfect example. You can't buy Taiwan Semi locals as a non, somebody who doesn't have the ability, I want to get into the details of it, but you need to be able to own Taiwanese securities. I did it all the time, it's a madness, but they're not fungible. So the ADR does not track the local because you can't go back and forth. You can't go up to the custodians and say, "Here's my Taiwan dollars and my TSM. "I want to go buy Taiwan locals. "You can't do that." And so they don't track each other, so very much to your point, know what you're buying. If you think you're buying Taiwan Semi 'cause it's tracking the local stock, it may be completely uncorrelated to the actual Taiwan Semi country. They rhyme, but you can get some premiums and discounts and so on and so forth that can cause some troubles where you think you own one thing and you don't, Baba too, those are, you can't buy Chinese locals, but you can own ADRs. - Right, and this goes, his example goes to just about any country, Mexico, you name it. So yeah, leave it at the professionals. They got boots on the ground as we like to say. They know the local situation. They know the currency, then so on and so forth. So what percent of your portfolio should be diversified and international? Again, that's up to you, but you never can go wrong with maybe five or 10%. In most cases, it's hard to justify going more than that. Again, I think one of the most ironic things, and I've shared this with the audience many times Jason, is when I started this business 35 years ago, it was pretty simple. The US market started having problems with economy. Hey, we just moved the clients money overseas, right? And now it's not the case, right? We go down, it seems like they go down and vice versa. We're one big happy family. So keep that in mind that that's one thing that I have noticed has dramatically changed over the years. All right, let's go to individual security diversification. Now, this is an interesting one also. How many stocks do you need to be quote diversified in a portfolio? Well, again, there's many, many theories out there, but I know, I don't know about you, Jason, but when I was brought up in this business with the various mentors and things I've had over the years, and one thing they pounded in my head when I was a brand new broker is, look, you don't need more than about 20 securities in your portfolio. You do anything more than that, and it doesn't make any sense, right? And so I think that's always kind of a good way to go. Now, some of our institutional partners, they will own many more than that, but there's, again, different reasons that they do it. But for the individual person, 20 to 30 individuals, this is what's called the efficient market frontier and old theory that's an old Wall Street strategy, that that's all you need in there. So if you own more than that, nothing wrong with it, but just figure out why you need to do that. And then, of course, how big do you want to own to that? Well, again, you look at institutional portfolios, like the world, Jason came from, what was your typical holding, Jason? Two, 3% maybe? - Yeah, I think depending on the benchmark too, right? Yeah, but yeah, anywhere from two to 4% is probably a decent allocation, right? 'Cause for that fact, trying to be diversified, you don't want to have all your eggs in one basket, but yeah, it very much depended on the benchmark that you were tracking. - Yep, there you go. - Typically what I follow too, personally, and in a lot of our portfolios, right? Outside of the sectors that we maybe want to be bigger, single stock-wise, we're two to 4% at the most. - That's right. All right, let's stick this one in. Let's get it over to Kristin Snow to wrap us up with the Right Now traffic center. We'll come back and talk about style and diversification. Hey, Kristin. (crickets chirping) - Welcome back to the John Sanchez Show. On his stock 780KOH, it's with Jason Gaunt. All right, I'm talking about diversification, kind of self-testing your portfolio. But before we get to the back to that, Jason, I think we're going to run out of time, but I want to make sure we get a couple of things out of the way first. I think that'll be a little bit more important 'cause we've got to be timely here. As you mentioned earlier, we got Jackson Hole. So Jackson Hole again is the, I don't know how you'd even describe Jackson Hole's symposium. This economic symposium, you get a lot of Fed members and of course the chairman there, et cetera. Sometimes earth moving things will come out of it and other times, most of the time, not. But the market pays very close attention. That's going to start on August the 22nd and conclude on the 24th. So keep an eye on that one. As far as the rest of the calendar, I was looking at that. We really don't have anything all that major next week, do we? - No, next week's fairly quiet. - Yeah, 10 minutes on Wednesday, that's about it. So they'll need to worry too much about that. Still, in the heart of earnings season, start to taper down just a little bit. So I think it's going to be another interesting week. We'll see, like you said, no bad news and the market should continue to melt higher. All right, so back to our list here. Now, we were talking about investment style and size diversification. Now, some of you may know this or may not. So I wanted to bring this to the table. For some of you may be familiar, you may not of what's called the Morningstar Stylebox, right? This is something that in your early years of being an advisor, you live and die by the Morningstar Stylebox, right? You want to make sure that it's like a tic-tac-toe board. You want to make sure your clients have a little bit in each of the nine boxes. And so I thought it'd be kind of interesting just to enlighten everybody on this, Jason. 'Cause again, this is another way that we can see if we're diversified. So if you're not familiar with it, I'll just give it to you real simple. Just visualize a square and inside that square, you've got nine cubes, okay? Now, across the top of that cube, you have the columns value, blend, and growth, okay? And then down the right side of the cube, you have large, mid, and small. So the idea in portfolio diversification is to say, okay, what percent of my portfolio do I have in large value, large, blend, large growth, mid-value, blend, growth, small-value, blend, growth, et cetera? And kind of chart where your percentage of allocation is, because again, these are the nine main areas of market styles, and that's why they call it the Morningstar Style Box, is that it's a style, right? How much do I have in each of those areas? So I thought that'd just be a little fun fact for everybody to kind of take a look at and see, it's a great exercise to go through and figure out where you already maybe go, oh gosh, I'm all, you know, large cap growth. - Top right. - Top right, exactly. - Yeah, and a lot of people end up being there, right? - Yes, they do. - A lot of your-- - Is it all the time? - Especially for the one case. - Yeah, you'll see it inside of your 401(k) statement, you'll see it, you know, you can actually put your portfolio into lots of different websites, so on and so forth that, you know, but it depends on what the goals are, right? I mean, large cap growth has been great over the last several years for sure, but you just wanna make sure that you, you know, don't get in trouble getting too concentrated in any one of those four quadrants, top right, top left, bottom right, bottom left. And, you know, for specific funds or strategies, that makes a ton of sense. Put your overall portfolio, then you're really not diversified very much at your point, you just own a large cap growth stock, you might as well just, or large cap growth portfolio, you may have more bets than you think, and you could probably find somebody who's really good at large cap growth and not pick it yourself, 'cause, you know, those are all good tells. - And most of your mutual funds will tell you where they fall in that style box, where a large cap growth or whatever, but a great way to do this, it's a, again, we're talking about self-analysis here. I don't know if they charge now, I know for a while they didn't, but MoneyStar is a phenomenal company, but you can go to MorningStar.com, and you can, like I said, I don't know if it's free or not, but you can get, it's called the MorningStar X-Ray Report. Did you ever, have you ever ran with those before? - Yeah, you can. - Yeah, and you can drop a portfolio into lots of things, and it'll do it too. - Yeah, and it'll analyze all the holdings of each of your mutual funds. It's a great exercise, especially for a 401K, and it'll tell you, you know, it'll fill in the numbers for you, where you fall in the style box there, and tell you right away, hey, this is where you are. So, great to have a great way to do it. Our final points, obviously, we want to consider risk tolerance and time horizon. You, again, as we're talking about portfolio analysis tools to see where you really sit, and then Jason, your favorite, rebalance on a regular basis. - Yeah, you can, you know, things will drift, things will win, you know, your winners will get bigger, your losers will get smaller, and if you want to keep that diversification, sometimes you get a trim 'em and raise 'em to get it back to, you know, where you were prior, because you'll get skewed and be out out of where you want it to be from a risk. (laughs) So, all right, buddy, great job as always. Wish you a great weekend, I wish you a great weekend. All of you, we'll see you again on Monday on the John Sanchez Show. God bless, have a great weekend. - This program was sponsored by Sanchez Wealth Management. The material in this program was intended as general information only, and should not be taken as specific investment tax or legal advice. None of the information on this broadcast was intended to be a solicitation for the purchase or sale of any security. Further information is available by contacting John@sansheswealthmanagement.com, or 775-800-1801. John Sanchez offers securities and advisory services through Independent Financial Group LLC, a registered broker, dealer, and investment advisor. Remember, FINRA SIPC. Securities offered only in states, John Sanchez is registered in. Sanchez Wealth Management LLC and Independent Financial Group LLC are unaffiliated entities. - It is Ryan Seacrest here. Everybody needs some variety in life. That's what I love about Chumba Casino. They know how to keep things fresh and exciting. All their games are free to play. Like spin slots, bingo, and solitaire. You can claim free daily login bonuses too, and they release new games every week. So spice things up with ChumbaCocino.com now for your chance to redeem some serious prizes. Sponsored by Chumba Casino, no purchase necessary. 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