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It’s time to think about how much risk you’re stuffing into your portfolio. Is it just right or have you overloaded the plate and set yourself up for a Black Friday food coma.
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That’s what we’re breaking down today on stocks in translation. So let’s start by building a Thanksgiving portfolio plate.
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We start with the main course. Turkey is your broad market core, S&P 500, the thing most of your calories come from. And right alongside, mashed potatoes and stuffing, our comfort food.
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Think defensive sectors and bonds. These positions may not be exciting, but they help keep your returns more stable when someone spills a big dish and everyone’s reaching for napkins.
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Then comes the gravy. These days, that’s your AI and growth exposure, tech, semis, the names that have done almost all the heavy lifting this year.
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Gravy makes a meal, but remember, you’ve already got a big chunk of exposure thanks to your turkey, the S&P 500. Watch out for concentration.
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Now, let’s move on to the second plate. Cranberry sauce is your speculative bets, the high beta ETFs, Bitcoin, crypto, the stuff that can light up the table or blow up your appetite.
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Ideally, it’s a spoonful or two, not half the plate. And remember, not everyone likes cranberry sauce, and that’s okay.
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Pumpkin pie is a fun money bucket, single stock trades, meme names, tiny positions you size with care so that if they go to zero, you’re still having a great holiday.
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Now, that’s the menu. Let’s look at some strategies for serving up the main course, the turkey.
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In this chart here, we have the S&P 500 with two different waitings. The market cap version, the usually the one we usually watch, and the equal weighted version, both over a couple years here.
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Cap-weighted is like loading your plate with only turkey breast from the top seven or 10 stocks. And to be fair, that’s tasted pretty incredible during this three-year bull market.
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The cap-weighted index has crushed the equal weighted version both short and long-term. Equal weight though is the plate where you take a little bit of every part of the bird, some white, some dark, even a little wing.
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That gives you more industrials, financials, and some of the smaller names in the world’s biggest stock market index. Just something to think about.
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Now we got to get into Thanksgiving family dynamics. Every year, we have the aunt who brings some unloved side dish. Here we’ve got small caps, REITs, or real estate investment trust, and international stocks, which have actually done very well this year.
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But not everyone’s piling into the green bean casseroles of the market right now. If you do and it doesn’t work out, you can always sell it at a loss and take the tax deduction.
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Whatever, just don’t give it to the dog.
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Then there’s the uncle who always insists on talking about uncomfortable politics. Here we have gold, the dollar and foreign exchange as well as those protest trades in crypto.
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This is where all the loud deficit talk shows up. And remember, he might have a few great points. And to be fair, gold is absolutely trouncing the S&P 500 this year.
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But selling the farm and buying physical might just be going a little bit overboard. Your job isn’t to trade every hot take, it’s to decide which of these actually fits your risk tolerance and your time horizon.
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Finally, here’s our Thanksgiving week market checklist. With Wall Street traders away from their desks, lower liquidity can magnify moves.
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Headlines can theoretically hit harder, but most years, it’s pretty smooth sailing. Nevertheless, we have seen some big surprises.
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In 2009, 2014 and 21, we got some pretty big Black Friday moves. Some were great buying opportunities, so watch out for those food comas.
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Friday’s session is only half a day from 9:30 a.m. Eastern until 1:00 p.m. And the Yahoo Finance team has you covered around both of the bells and our editorial team will be bringing you the stories and stats that matter.
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That includes some of the big key numbers from the big box and cyber retail numbers that Wall Street will be watching and trading off of. And while you’re waiting for the turkey to be carved, tune into the stocks and translation podcast for more jargon busting deep dives.
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New episodes can be found Tuesdays and Thursdays on Yahoo Finance’s website or wherever you find your podcasts.