Even within thematic risk, a person might want to spread their bets.
"Thematic risk refers to the potential downsides when investing in broad, long-term trends (themes) like AI, clean energy, or digital transformation, primarily due to concentration in related stocks (Edit. AI bold)making portfolios vulnerable if the trend falters, if the theme is poorly chosen (hype vs. reality), or if timing is off. It's a type of risk distinct from standard sector risks, stemming from a theme's unique, interconnected nature, meaning a downturn in that specific theme impacts all its investments significantly, often more than traditional diversification helps."
About personal interests:
I like to buy stocks related to where I shop and the stuff I buy. Which would mean where I have a personal interest.
Now take intellectual personal interest. Hey, I'm interested in clean air. Do I have a strong personal interest?
I'd say no - I can't discuss facts and figures related, the expense of it all, what my congress people are doing about it, the companies in the forefront (utility NEE?). If I did want to make some effort in understanding clean air or "digital assets" or AI, or etc. -- if I did have that strong personal interest in delving into these "theme" types, I could see coming to a conclusion that placing a small % of a portfolio into some related stocks of it is ok, assuming I'd be "comfortable with elevated volatility".
===
"For investors with a strong interest in thematic innovation and comfort with elevated volatility, a modest allocation of 1% to 4% in digital assets could be appropriate,” Chris Hyzy, Bank of America Private Bank’s chief investment officer, reportedly said in a statement." Somehow, I can't put my finger on it, I'd be kind of scared to invest with some guy, if he actually talks like this. Even if he's right. -g- |
