Need guidance with a 10k investment

Hi all,

I’m new to investing and got a subscription for Stock Advisor. I have around 10k that I want to invest. After watching some videos online and reading a bunch of articles on Motley Fool and other websites, I understand that it’s better to invest in companies you know and care about. I work in IT and have a better understanding of tech companies. I was thinking about buying 4 stocks: Nvidia, Broadcom, Airbnb, and Super Micro. While reading through the suggestions on Stock Advisor, it advises to not invest in less than 10 stocks. So, I’m a little confused and would appreciate any guidance.

  • Should I invest 1k in 10 different stocks?
  • How do I pick those 10 stocks as Stock Advisor has a lot of options?
  • It is a good idea to invest everything in the tech sector or should I include stocks for healthcare, natural resources, etc.

Thanks.

If you subscribe to Stock Advisor, they have a premium discussion board where you can receive personal advice. Better to post your question there.

The tech stocks you mention are excellent. I have Nvidia. The main question should be is now the time to buy. Nvidia is the clear leader in AI chips and still has a ways to go. Earnings are strong. They can sell all they can make. Of course it won’t last forever. But earnings are strong. I think OK to buy but watch it. PE compression could make for a correction. But stock will likely recover.

I know that Broadcom and Super Micro are of interest for their AI components. I think higher risk that Nvidia. Not sure about Airbnb.

As to what to own, that depends on your goals. A concentrated portfolio can be ok while it does well. A diversified portfolio is less risky and usually preferred by many. Better on the downside but less rewarding on the upside. Etfs can be used for diversification if you want to focus attention on tech stocks.

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I’m just a regular investor like you, but let me give you my perspective since I’ve been investing for quite a while:

The 10 company minimum is a good guideline, but when you’re starting out… just view it as a guideline, not a “law”. You’ll probably be buying more in the future. I’d suggest starting with a couple you like most and go from there.

My portfolio has less than 10 companies, but it includes NVDA and SMCI… and I wouldn’t suggest it’s a good idea for anyone to mimic my style. Do what makes sense to you!

Rob
He is no fool who gives what he cannot keep to gain what he cannot lose.

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Without knowing your risk tolerance and time frame till you need to spend the money no one can tell you. The market is overvalued and has been for a very long time and can be for a very much longer time; however it also suggests higher risks in the years ahead (no one can predict when crashes will occur, but they will). Make sure you have enough life insurance for your dependents, enough disability insurance for you (people face a 5% risk of over 90 days disabled before retirement), an emergency fund. Then fund the max of retirement accounts you can afford. Warren Buffet says to buy an index fund. He himself has mostly failed to outperform in recent years; most thoughtful observers are predicting mediocre returns in the next 10 years. The problem is most return has lately come from very few stocks, so you have to guess which they might be forward if you wish to outperform an index. It isn’t about “buying what you know”. If you don’t buy an index fund you should think of it as intelligent guesswork, akin to going to Vegas and card-counting (illegal there) to increase odds. Only odds. 10 month momentum is usually good. Being overvalued compared to the stocks’ industry usually bad. Combining growth and value criteria usually better than one by itself. There are few but a few 15 year periods of zero return for stocks, and lots of 30% drops, a few 50%, and 75% for tech stocks so think about your ability to keep going if and when this occurs (since it will).

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Thank you, all of you, for your valuable insights.

This is going to be a long-term investment so I’ll plan to diversify and be patient. My risk-tolerance is fairly low because this is hard-earned money and I don’t want to gamble it.

Thank you, @musselmant, for reminding me of other important aspects such as insurance coverage and emergency fund.