Stock Market, Sector and Company

The 70-20-10 Rule” piece featured on finance website, Seeking Alpha, provides another application. In this case, the breakdown of stock returns which were driven…

  • 70% Stock Market – what the U.S. stockmarket did
  • 20% Sector – was determined by how the industry group did
  • 10% Company – was based on how undervalued and successful the individual company was

The breakdown underscores the difficulty of identifying “hot stocks” and the importance of looking at “market tracker” funds as a way to diversify and avoid the hubris of trying to “beat the market”.

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