Bold Strategy for Investors from Suze Orman

Suze Orman's Investment Advice Draws Attention

Many investors panic when they realize that a portion of their portfolio is carrying the entire burden. However, Suze Orman emphasizes that caution is necessary in this situation.

In a recent episode of Suze Orman's Women & Money podcast, a letter read by Orman and her partner shed light on an important reality of the investment world. Rachel, who is not complaining about excessive spending or debt, expressed concerns about portfolio diversification.

In her letter, Rachel wrote: "I love VOO as much as Suze, but the top 10 stocks currently represent 38%." The Vanguard S&P 500 ETF (NYSE: VOO) is a low-cost index fund that tracks the 500 largest publicly traded companies in the U.S. It is popular for its simplicity and potential for continual growth over the long term. However, in recent times, tech and AI giants like Apple, Microsoft, and Nvidia have started to make up a growing portion of the index.

KT paused while reading the letter and laughed, saying, "It seems I'm buying the S&P 10 instead of the S&P 500." Orman did not dispute this, immediately responding, "Yes, that's why I love VOO."

Orman also noted that today’s stock market does not operate the same way it did in the last century. "Now the top 10 stocks make up 38%," she said. She emphasized that investors who prefer alternatives like SPDR funds or broader options such as the Vanguard Total Stock Market ETF (NYSE: VTI) generally hold the same big names. "Everyone is in the AI space," Orman stated.

While it is commonly known that financial experts usually recommend distributing money evenly among sectors, Orman takes a completely different approach. "I’m all for loving VOO, but I think aside from VOO, you should have a greater weight in that top 10 and buy them individually more," she said.

At this point, she shared a sentence summarizing her strategy: "Sometimes when a friend or someone asks me where to invest, I say, okay, let’s put 50% of your money in VOO. Then let’s buy Nvidia, AMD, Palantir, IONQ, and others.”

Her aim was not to favor tech stocks; the important thing was to settle in where the real growth was happening. "Diversity that is not in the right sector leaves a lot of money on the table in these types of markets," Orman said.

Orman also mentioned that she made a personal shift in the same direction. "I switched from the Vanguard Total Stock Market Index to VOO because I wanted to focus more on that top 10," she added.

KT finally asked, to ensure that newer listeners were informed: "What does VOO mean, tell me?" Suze replied, "It’s just the Vanguard Standard and Poor's 500 ETF, that's all there is to it." Simple, but bold. Although Orman’s advice may seem counterintuitive at first glance, her message was clear: In a market shaped by innovation, over-diversifying can sometimes mean losing everything.