General Stock Investment Strategies/401k


My company offers large & small cap funds but no mid cap funds. I want to stay diversified. My current break down is 80% stocks - 20% bonds. Of the 80% stocks I have 85% large. cap, 10% small cap, and 5% international stock fund. Normally I would put 20% in mid caps, but they don't offer any, so I just put that 20% in Large cap instead. I don't know what else to do. Any suggestions ???

Thanks, Mark

Mark, it sounds like you are trying to stay conservatively diversified. That is you have stocks, both domestic and international, and you have bonds. Not knowing much about your life, your goals, your time horizon, your comfortableness with risk, etc., I'm not sure what I can offer you in helping you. I am not an advisor, so you should know that I don't keep a broad array of investment strategies in my mind.

I think the way your portfolio is set up you are trying to possibly benefit from a broad exposure to various investments. I do not invest in bonds. For me they are a bit too conservative. I also do not invest in foreign stocks. I like investing in domestic stocks. I do my own analysis work and I find that the US accounting rules are more consistent and uniform than investing in foreign equities. If you have an advisor or broker that is shouldering the brunt of knowing what those foreign accounting rules are and he has some confidence in those rules, well you might be in good shape with that 5% of your portfolio.

As for the percentages you have in small vs large cap's, again, I think you have a decent mix for being diversified. I have personally come to appreciate the larger cap's more than the small caps. Companies that have large capitalizations are safer for me.

Have you looked at any historical records of how your companies investment strategies have performed over the past 5, 10, 20 years? If you can get some idea of how these have done over the ups and downs of the markets in general this might help you in understanding what you can expect from your current investments (relative to the overall market) assuming you are interested in returns. You might be more interested in just your allocation of your funds. This might be why you seem to be concerned with not having in mid-cap stocks. No mid-cap diversification.

As for being more specific for your allocation not having any mid-cap stocks, I think I would have done what you did and put what would've been allocated for mid-caps into larger caps.

I'm not real sure if I helped you or if we need to talk about this some more. Go ahead and email me back if I have not really answered your concerns. I don't want you to feel like you have wasted your time here.

General Stock Investment Strategies

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I can answer general questions about stock investing. I am not a trader and do not have much ability to answer questions on trading. I am a long term investor, so those questions are fair game.


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