Long duration stocks and ETFs are those that are presumed to generate large earnings several years down the road. Some examples are ARKG, ARKK, CRSP, NET, PTON, ROKU, SNOW, and ZM.
During the pandemic, due to the Fed policy, long duration stocks have become very popular, and now many portfolios are heavily weighted in them.
These stocks are very expensive and typically lose large amounts of money.
Not many investors and analysts realize that long duration stocks have been primarily driven by the Fed policy. Now, the Fed is making an about turn. Tightening has not even started, yet many popular long duration stocks have fallen 30 – 80%.
1.1Review your portfolio and assess what percentage is in long duration stocks and ETFs.
2. Conservative investors should not own any long duration stocks and should consider selling.
3. For aggressive investors, it is perfectly fine to own long duration stocks in a well diversified portfolio. Most investors may need to trim so as to not exceed 20 – 30% of the portfolio.
4. Carefully study the Speculative Positions section of the Trade Management Guidelines.
Symbols: ABNB, AMZN, ARKG, ARKK, BRK.B, FVRR, NET, PTON, SNOW