What is a Diversified Portfolio?

When first entering investing, the amount of information out there can feel overwhelming.

You start with the broad market –> work down to sectors –> work down to companies –> typically, choose the best of breed.

A Diversified Portfolio is made up of a minimum of 5 stocks (usually no more than 7) with only one stock from each sector.

I’ve decided to make it easier to build a portfolio from my picks by breaking each of my positions down to their respective into different sectors. Note that certain companies (like Apple – AAPL – and Amazon – AMZN) may be listed under multiple sectors.

Companies in multiple sectors allow you to hold two positions that might overlap in one sector (and may likely trade together) but still hold a diversified portfolio as your investment thesis (reason for owning them) is different for each stock.

How to Use the Following List

I’ve listed the different sectors and positions I hold below. I’ve also listed competitors as “Others” for each list. The Others I’ve listed do not encompass ALL of the stocks in this sector by any stretch, but are companies that I’ve researched and feel are reasonable alternatives even though I didn’t choose them.

To build a portfolio from this list, select the 5-7 different sectors that you feel best about and then select a stock from the ones listed. I’ve also marked the *BEST-OF-BREED* stocks in each sector. These stocks are notable for being recognized by investors and analysts as being the best performer in their particular sector, making them the safest choice for reliable returns.

Naturally, you don’t have to pick any of my stocks. This is just a good starting point for beginners.

Biotech/Pharmaceuticals

• GW Pharmaceuticals (GWPH) – Prescription medication development
• IDEXX Laboratories (IDXX) – Develops veterinary medical equipment and diagnostics *BEST-OF-BREED*
• Others: Celgene (CELG), Sage Therapeutics (SAGE), Pfizer (PFE)

Cannabis / Marijuana

• Canopy Growth Corporation (CGC) – Consumer Retail *BEST-OF-BREED*
• GW Pharmaceuticals (GWPH) – Prescription cannabis development
• Others: Cronos (CRON), Tilray (TLRY)

Chips / Semiconductors

• Cypress Semiconductor (CY) – Produces screens, modems, and chipsets for the majority of cell phone providers (not Apple, though)
• Nvidia (NVDA) – Graphic & processor chipset manufacturer for gaming, Artificial Intelligence, Autonomous Driving and more *BEST-OF-BREED*
• Others: AMD (AMD), Intel (INTC)

Cloud Plays / Software-As-A-Service (SAAS)

• Salesforce (CRM) – Online platform servicing Customer Relationship Management – CRM *BEST-OF-BREED*
• New Relic (NEWR) – Online provider of software enabling organizations to collect, store and analyze “big data.”
• Others: IBM (IBM), Oracle (ORCL)

Consumer Products

• Apple (AAPL) – Cell Phone, PC, Tablet Developer *BEST-OF-BREED*
• Nike (NKE) – Shoe and athletic apparel manufacturer
• Others: LuLu Lemon (LULU), Under Armour (UA)

E-Sports / Video Gaming

• Logitech (LOGI) – PC and Console Hardware Manufacturer with a focus on gaming. *BEST-OF-BREED*
• Take Two Interactive (TTWO) – Leading video game manufacturer who owns leading game properties – Borderlands, Grand Theft Auto, NBA2K, Red Dead Redemption and more. Considered Best of Breed in the Video Game industry.
• Others: Activision/Blizzard (ATVI), Electronic Arts (EA), Microsoft (MSFT), Nintendo (NTDOY)

Financials

• Citigroup (C) – Primarily domestic banking with some international exposure
• JP Morgan Chase (JPM) – Domestic banking play with individual and firm exposure *BEST-OF-BREED*
• Others: Bank of America (BA), Goldman Sachs (GS), Morgan Stanley (MS)

Financial Technology (Fintech)

• Square (SQ) – Develops financial solutions targeting small businesses with growth prospects in small-business retail lending and more. *BEST-OF-BREED*
• Others: Mastercard (MA), Paypal (PYPL), Visa (V)

Industrials

• Boeing (BA) – Aerospace Manufacturer *BEST-OF-BREED*
• Others: Caterpillar (CAT), United Rentals (URI)

Media / Entertainment

• Disney (DIS) – Creates movies and TV with Disney, ESPN, ABC and other properties *BEST-OF-BREED*
• Others: AT&T (T), CBS Corporation (CBS), Comcast (CMCSA), Verizon (VZ), Viacom (VIA)

Retail

• Amazon (AMZN) – Online Retailer *BEST-OF-BREED*
• Others: Target (TGT), Ulta Beauty (ULTA), Wal-Mart (WMT)

Technology

• Amazon (AMZN) – Amazon Web Services
• Apple (AAPL) – Technology Services *BEST-OF-BREED*
• Corning (GLW) – Specialty Glass (Fiber-optic, Screens) and Ceramic Manufacturer
• Others: Alphabet (GOOG), Microsoft (MSFT)

Other Sectors?

Do you have other stocks or other sectors you’re interested in? I keep up on almost EVERY sector in the stock market, so if you’d like me to review your stock or offer suggestions for a particular sector, just ask in the comments!

Also, if you’d like help choosing a brokerage, check out our blog post on Robinhood.