Brief Summary
In this episode, Brian from Business With Brian hosts Nolan from Investing Simplified to answer community questions about investment strategies. They discuss balancing growth ETFs, sector ETFs, and individual stocks, especially for younger investors. They also touch on diversification, risk management, and specific stock and ETF picks for 2026, providing a comprehensive guide for investors looking to optimize their portfolios.
- Balancing ETFs and individual stocks requires understanding risk tolerance and life cycle stage.
- Diversification beyond traditional equities can be beneficial but should align with investment goals.
- Market cycles and psychological factors play a crucial role in investment decisions.
Start
Brian introduces Nolan, also known as Professor G, from Investing Simplified. Nolan is a university professor specializing in finance and entrepreneurship with experience owning multiple businesses. He created his channel to simplify finance for people. Brian highlights a previous video they did together, recommending viewers check it out for valuable insights on stocks and ETFs.
Question 1
Nolan addresses the question of how to combine broad growth ETFs, sector ETFs, and individual stocks in a portfolio. He emphasizes the importance of understanding an investor's risk tolerance and life cycle stage. Nolan suggests allocating a larger portion of the growth portfolio to broad growth ETFs for downside protection, with smaller portions in sector-specific ETFs and individual stocks for higher upside potential. He recommends a breakdown of 60% in broad growth, 30% in sector-specific, and 10% in individual stocks. Brian shares his stock-heavy investment approach, emphasizing the need for due diligence and education before investing in individual stocks.
Question 2
Nolan discusses how to decide what belongs in ETFs versus standalone stocks, emphasizing that the approach varies for each investor. He advises investors to examine the top holdings of their ETFs to understand their actual stock exposure. Nolan suggests that if an investor wants to add individual stocks, they should consider those already heavily represented in their ETFs. Brian adds that when he transitioned from ETFs to individual stocks, he focused on the top 15 holdings of his ETFs.
Question 3
Nolan addresses how aggressive younger investors should be, advising a balanced portfolio with a portion in stable assets like SCHD or VTV for cash flow. He suggests allocating the majority to the S&P 500 or the total US stock market, with the remainder in higher-risk growth sectors or individual stocks. Brian agrees that time horizon influences risk tolerance, emphasizing the importance of adjusting the portfolio over time. Nolan highlights the importance of researching market cycles and being cautious when investments seem too easy.
Question 4
Nolan discusses strategies for managing investments during market run-ups and drawdowns without timing the market. He suggests that adding to investments like the S&P 500 is acceptable even at all-time highs, while speculative stocks require more caution. Brian mentions that he rarely rebalances unless a stock has a major run-up, like Nvidia, and he needs to reduce his portfolio's risk. Nolan emphasizes the importance of having a fully funded emergency fund to avoid being forced to sell investments during downturns.
Question 5
Nolan discusses incorporating assets like gold, commodities, international exposure, and real assets into a growth-oriented portfolio. He notes that while gold can be a good store of value and diversification tool, it may dilute returns. For growth, he suggests considering speculative markets like Bitcoin, Ethereum, or small-cap stocks. Brian emphasizes that the decision depends on the investor's time horizon and defensive needs, highlighting the importance of diversification and not overinvesting in one speculative area.
Question 6
Nolan shares his top stock pick for 2026: Redcat (RCAT), a drone technology company. He also mentions IN, a data center play, as another promising stock. Brian recommends Modine, a company supporting data center cooling infrastructure. For ETFs, Nolan suggests SCHD or VTV, while Brian recommends ARKQ, which focuses on robotics. They both emphasize the importance of doing thorough research before investing in any stock or ETF.
