The Super Six are worth a quarter. That’s the message Jim Cramer shared at last Satuday’s Investing Club Annual Meeting when asked how much of an investment portfolio these days should be allocated to the elite basket of technology stocks consisting of Apple , Amazon , Alphabet , Microsoft , Meta Platforms and Nvidia . All of the Super Six are Club stocks. Toss in non-Club holding Tesla , and the group is known as the Magnificent Seven. “We only have six of the seven. … I’m actually OK with 25% in those,” Jim said at the meeting. “Some people would say that’s gutsy, but these are the most unbelievable companies I’ve ever seen.” What makes these stocks so formidable is the way they are “constantly reinventing themselves,” Jeff Marks, the Club’s director of portfolio analysis, said alongside Jim on stage. “They have plenty of cash to not only weather any potential storm but also invest in their future.” He continued, “You’re seeing that play out now,” amid booming interest in generative artificial intelligence. The Club portfolio, which consists of 32 stocks and cash, has nearly a 22% weighting in the Super Six. Investors might find themselves wondering: If these companies are so great, why not dedicate more of the Club’s portfolio to them? Perhaps some might even ask, why own anything else? The high-level answer is diversification – not putting all your eggs in one basket – remains an important risk-management tool, even if the dominance of the Super Six, or Magnificent Seven, in 2023 obscured the benefits of the classic investing rule. Let’s consider how to allocate a hypothetical portfolio consisting of 12 stocks and 10% cash. That’s about the number of names Jim recommends for individual investors to keep up on their homework . The Super Six, while talked about as one group, has exposure to various end markets and investment themes such as AI, cloud computing, and digital advertising, to name a few. With 25% in these six stocks, there’s ample space…
Read the full article here
Leave a Reply