The weight allocation in this portfolio makes it less prone to having concentration
in bubble stocks that have experienced dramatic price appreciation.
Well, recent high
flying bubble stocks like FB and TSLA are showing some cracks (and topping patterns).
In fact, the consensus will often amplify fallacious thinking, especially
with bubble stocks & markets.
Unfortunately, when you hear investors talking out of both sides of their mouth like this, you know you're getting
into bubble stock territory — not the easiest thing to bet against though...
Interestingly, I clearly recall a buffalo herd of housing economists saying the reason the housing market took off so stunningly from about 2000 and onward was because the tech -
bubble stock market had tanked and those burned investors were looking, yes, for a place to put their money.
Unlike the S&P 500, the S&P 500 Dividend Aristocrats is an equal - weighted index, which reduces the potential overweighting
of bubble stocks.
The equal weight component results in a larger proportion of smaller companies compared to a pure market cap weighted portfolio, making it less prone to having a high concentration
in bubble stocks that have experienced dramatic price appreciation.
The temptation is always there to chase instant returns and
bubbling stocks, but Viswanathan sticks to what he knows — to solid effect for his clients.