Asked 2w ago
I have been following this Financial youtuber, Chicken genius. The man offers good advise on how to allocate wealth for growth investing but he seems like a deviant to me.
He mentioned recently that he js so sold on Tesla that he will allocate 95% of his portfolio in it. Also mentioned that he will dump money into Bitcoin next.
I feel that he will lose money eventually. I mean 95% stock allocation? Too much of a risk? He also advocate having 2-3 months emergency fund as a max.
His videos are interesting BUT people should not copy him, especially beginners.
95% into a single stock is just too risky. No financial experts or professional will recommend this. Many things can go wrong and it’s not within an investors control. No matter how much research or effort one put in, the stock performance is not 100% in control. Youtube should not be the main source of knowledge, most youtubers are not qualified to provide financial advise. Instead, one should pick up books or even attend courses/ webinar. Sad to see many new investors following youtubers blindly or chasing hype stocks.
Past performance does not equal to future performance, chicken genius got lucky and profited a lot from Tesla shares previously. This does not mean he can consistently do so in the long term. Although i believe in Tesla and Elon Musk, i feel that the stock is just overvalued and there’s too much hype. Also,I’m not against chicken genius, I just do not agree with his strategy.
I believe his strategy is to concentrate on a few outstanding stocks rather than diversify for the sake of diversifying. This can work well if you have done EXTREME in-depth research into the businesses, is EXTREMELY convicted of the business, and is EXTREMELY disciplined and emotionally stable to ride through the volatility that will come along with your portfolio. Also, it helps if you are able to enter the stocks before the masses/hype at a significantly low price (which I think is what ARK and CG did for TSLA. They entered really early into the stock), so even if TSLA now falls another -20%, -30% or even more, they would probably still be in the green.
At this moment where TSLA is already quite hyped up, I personally do not recommend to go all in on TSLA. However, if you still wish to go for this high-concentration strategy, what you can consider doing is to mix TSLA with other high-growth stocks (but provided that you do your EXTREME due diligence on the businesses and you should ideally already have some experience to ride through the volatility AND only invest money you can afford to lose).
Also, we do not have a clear picture of his total portfolio. Remember that Cash can also be considered as part of one's portfolio. His 95% TSLA holdings does not necessarily mean 95% of his TOTAL Portfolio. E.g. his TSLA holdings could possibly form only a small part of his entire portfolio including cash & other assets.
I believe Diversification is still key in investing because there is no 100% certainty.
As with any other advises, dyodd. some of his thought process are actually quite interesting.
what i know he has other businesses, so even if he loses 100% on his stock portfolio, he will not have to beg for a living, or live out in the streets. but at least he is not selling any trading/investment/property/crypto courses or app, so i give it to him.
Different people have different ways of approaching investing. Ken believes over-diversification isn't as great. But of course, under-diversification could be dangerous too. He also has walk the walk, showing us his portfolio's performance from time to time.
Just take in what you reckon is good information and don't just blindly follow suit.