While I currently have 50+ holdings in my portfolio, you will find that many of the names fall under a handful of thematic investment theses. Some of my top investment themes include:
28.02% in FAANG (FB, AMZN, AAPL, NFLX, GOOGL)
10.94% in Semiconductors/Semiconductor Equipment Manufacturers (LRCX, AMAT, ICHR, TSMC, MU, AMD)
10.70% in Biotech (REGN, VRTX, LABU, IBB)
8.15% in Chinese Tech* (BABA, TCEHY, BILI, DIDI)
6.76% in Homebuilders (LEN, PHM, KBH, DHI, TOL, MTH, TMHC, NAIL)
Currently FAANG as a group is doing well. In the past couple of weeks, AAPL, AMZN, and FB all hit all time highs. These stocks hadn't been doing too well since the second half of 2020 and the first part of 2021, so much of it was a catch-up trade. GOOGL has bucked the trend and has been doing well over the past year, while NFLX is trailing the rest of the group. Because AAPL has been such a large position in my portfolio, I've been trimming my position as the stock price has gone up. As the market cap hit ~ $2.5 Trillion, I expect it to underperform the market over the next 5 years, so I'm taking advantage of the recent price appreciation to reduce my concentration risk.
Nvidia has been driving the semiconductor space, but otherwise there hasn't been much action lately. After hitting over $800/share, NVDA has since taken a dip, taking the whole semi industry with it. Additionally TSM just announced earnings and slightly missed expectations, which further put pressure on the industry. If this correction continues, I will take advantage of the dip and buy more in this space (note: I do not own NVDA in my portfolio). Semiconductor chips continue to have a supply constraint which has been a boon particularly to semiconductor equipment manufacturers as many semiconductor foundries are looking to expand their manufacturing capacity to offset supply constraints.
Biotech has been getting crushed lately, largely due to investor sentiment dropping in part due to the current administration. Legislation to put pressure on pharmaceutical prices would hurt the sector, so the biotech index has been hit overall. On top of the ETF exposure I have in my portfolio, I also have a couple individual names. REGN and VRTX fall into the "goldilocks" area, not too big and bloated that they are slow growing, and not too small that they aren't making a profit yet (like the large majority of biotech stocks). They both have "one-hit wonder" drugs driving the majority of revenues with a few other smaller sources of revenue. The gamble is that each firm will be able to create another home run drug before the patents run out and growth dries up. But the stock prices are relatively cheap compared to the current growth they offer, so it's worth that risk.
Sentiment for Chinese tech is getting clobbered thanks to the Chinese government. The risk is high that these firms get hit with anti-monopoly or other government regulations or fees and that the stocks could eventually get delisted. While this risk is high, I believe the risk is already priced into the stock prices. For example, if BABA was a US stock, it would be worth approx. $350/share instead of the current $212. That's a 65% potential gain. If these risks and uncertainty evaporate with time, the share price will naturally appreciate.
Homebuilders have been slammed in the past couple of months. Lumber prices peaked in May but have since dropped by >60%. Interest rates jumped in the beginning of the year but have since dropped some and stabilized. High lumber prices and high interest rates for mortgages would both hurt homebuilder profitability. But considering both have fallen since May, it makes no sense why homebuilders are down 18-26% from their 52 week highs. Additionally the names in my portfolio are trading at a forward P/E ratio of ~4.5 - 7x so they are ridiculously cheap right now. That's why I've been adding to this theme over the past 2 weeks. While supply and demand in the housing market may soon equilibrate, the supply of new housing has and will continue to run short of what is needed to keep up with the demand of new household formations. So long-term fundamentals are good and prices are dirt cheap, so that's a no-brainer in my book.
Over the past 3 months, my portfolio is trailing the S&P 500 Index by 3.2%. This is to be expected considering 4 of my top 5 investment themes are currently underperforming. But that just means I get to take advantage of the low prices and load up while things are cheap. I'd much rather be in that position, then have everything be too expensive.
*note - broad definition of tech, not sector specific.