Imagine 10 stocks having a greater return with very little difference in volatility or downside risk. Well, that is what I have found. The large mega-caps like Apple, Microsoft, and Alphabet have outperformed the S&P 500 for most of the years I looked at.
Diversification is supposed to reduce risk but more recently 10 stocks is all that is needed and the risk is about the same as the S&P 500.
Will this trend continue in the future?
I tested selecting the top S&P 500 stocks in the past and simply holding them to the present. That way we don’t have the advantage of hindsight.
Watch the video to see the results.