Apple and Nvidia are both “hold it, don’t trade it” stocks. To be diversified, we shouldn’t have two similar category stocks in our top 5 holdings. With the recent jump in Nvidia pricing, I now have both in my top 5 holdings. Should one be trimmed out of the top 5? —Cyrus S. We can’t offer up personal investment advice on exactly when to trim a position. But what we can say is that “own it, don’t trade it” doesn’t mean that you should never, under any circumstances, sell shares. We do believe in diversification and have, at times, needed to trim a winner when its weighting has become too big as a percentage of our overall portfolio. Consider the case of Apple (AAPL), our long-held “don’t trade” name. But as much as we love the company, we don’t want to be the “Apple fund.” So in April 2022, we sold shares when our position had risen to 6.75%; at the time, no other position was above 5%. Any time a position is above 6% of our portfolio, we typically like to trim it back and reduce its weighting so that on any given day, the portfolio’s movement is not directly tied to one individual stock. It’s also important to think about diversification beyond just sectors . Apple and Nvidia (NVDA) are both based in the United States and are considered mega-cap tech stocks. Where they differ, however, is in the end markets each company serves. Apple is very much a consumer name. We’ve argued that it should be valued as a consumer packaged goods name in part because its iPhones are basically staples in today’s connected world. Nvidia, on the other hand, is driven mainly by the data center end market, with customers such as cloud service providers and enterprise players — not people that shop at Best Buy . (Nvidia does have a presence in the consumer market through its gaming chips). Whereas iPhones, iPads, Macs, wearables and services drive Apple’s revenue, artificial intelligence adoption and the need for accelerated data centers are driving Nvidia. With that in mind, you…
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