Diversification in TMF portfolio

I have been using TMF SA and RB for a about 6 months now. I was happy till end of year 2021 but like everyone else I am very much in the RED.

So I looked at all the stocks recommended by SA and RB. I found it is very tech heavy and is not well diversified to protect portfolio during downturns.

I understand the philosophy of TMF is to maximize returns. But none of the stocks will help you protect during downturn, especially those with high multiples.

I think TMF should have a good diversification strategy to provide cushion to portfolio during times like now.

What is the diversification strategy of TMF?

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Hi, mramesh. I apologize for the delay in responding to your question.

There is no question that the global economy and the US economy is facing uncertain challenges right now. Even moreso than back in January, the Ukraine war, soaring gas prices, the impact of global sanctions, all on top of pandemic-fueled inflation, has caused a wailing and gnashing of teeth in the stock market.

The thing to remember about TMF’s investing Foolosophy is that Fools invest in companies, not markets. This may sound trite, but it really is the core of the investment strategy for both Stock Advisor and Rule Breakers. While the market may not be kind to a company recommended for investment in the short-term, your analyst teams continue to have conviction in their long-term (3-5 years or longer) business growth potential.

A second thing to understand is that neither Stock Advisor nor Rule Breakers are managed portfolio services. They are investment idea services, from which members are invited to pick and choose which companies to add to their personal portfolios. While TMF certainly encourages diversification (15-25 positions at a minimum), the focus of both services is a growth investing strategy; there is no goal of maintaining defensive positions.

In fact, many Fools would argue that the best defense in a down market is a good offense - have a Buy Watch List and cash reserve handy for when the market presents you with discounted opportunities for the companies in which you have already decided you want to be invested. Some of my best gains and best long term performers came by having the courage to invest in a down market rather than ride the wave of a strong market.

Who would encourage you to ask questions about portfolio construction in your SA and RB service community discussion boards as this is a freemium community discussion board…

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