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Hi, 95% of my portfolio is in MSFT.

Argh. Yes, it's time to do something about this!

So far so good but I missed a whole run with stocks like AMZN, PINS, MELI, LVGO/TDOC, AAPL, TSLA etc.

Well, some of those stocks still might be good....

So I was wondering what are strategies to diversify to capture more growth and not be as exposed to one stock. I know the Tech industry, so far my picks have been good (SNOW, NVDA). I see all this stocks now are high, although I get it that for the long run they are still a buy. I am open to risk in what I know (Tech). Any ideas?

... but real diversification does NOT mean buying a bunch of stocks in the same industry that are going to more in lock step with one another. In the tech industry, I own shares of Microsoft (NASDAQ: MSFT), Advanced Micro Devices (NYSE: AMD), and Cisco Systems (NASDAQ: CSCO) -- but that's it.

I'm guessing that there are other businesses and industries that you know pretty well, if you think about it for a few minutes.

>> What do you like to do for recreation? You can buy shares of good resort and theme park operators, cruise companies, golf equipment manufacturers, etc. (Full disclosure: I own shares of Disney (NYSE: DIS) and Royal Caribbean Group (NYSE: RCL).)

>> Do you like to dine out? You can buy shares of major restaurant companies. (Full disclosure: I own shares of Darden Restaurants (NYSE: DRI).)

>> Do you like to travel, or do you travel on business? You can buy shares of both "major" and "regional" airlines. (Full disclosure: I own shares of Delta Air Lines (NYSE: DAL) and Skywest Airlines (NASDAQ: SKYW).)

>> Where do you and your family shop? You can buy shares of many retailers. (Full disclosure: I own shares of Limited Brands (NYSE: LB).)

>> And what are your hobbies? As a railfan, I have developed a pretty good knowledge of the railroad industry, but your hobbies likely point to knowledge of some other industry. (Full disclosure: I own shares of Norfolk Southern (NYSE: NSC) and Canadian Pacific (NYSE: CP and TSX: CP).)

I seriously recommend that you acquire a copy of Beating the Street by Peter Lynch, who was the manager of Fidelity's "Magellan Fund" back in the 1980's when it was totally outperforming every other fund that was out there by a huge margin. In this book, Peter describes how he picked stocks for the Magellan Fund -- and the real shock is that you and I can replicate his methods quite easily. It is the best "how to" guide that I have found anywhere!

When to sell MSFT to buy AMZN or the like?

If your position in a stock is grossly overweighted, the time to sell shares is ASAP -- with the caveat that you might want to sell those shares over some period of time. But when you need to sell a large number of shares, it's prudent to do it over some period of time. You probably have heard the recommendation of "dollar cost averaging" -- that is, buying lots in approximately constant dollar increments over some period of time -- for moving into a new position, thus ensuring that you buy more shares on the dips and fewer on the crests. The analog for selling is to sell increments of equal numbers of shares, thus ensuring that you realize greater dollar value on the crests.

Incidentally, there are two questions that I always ask about a stock.

>> 1. What is the customers' experience in doing business with this company?

>> 2. How does the company treat its employees?

If the customer experience is poor, the customers will go elsewhere -- that is the clearest "sell" signal that the market has ever invented. And if a company does not treat its employees decently, chances are that good employees will leave and the company will be stuck with the dregs -- that is employees who don't care and who don't do their job well -- and with very high turnover, which means high cost of recruiting and training new employees. If either is off, I'm steering clear of that company.

Good luck with your diversification!

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