I've been investing for about 15 years. During that time, the vast majority of my investments have gone toward individual stocks. But I recently put a significant amount of my wealth, about 12%, into an exchange-traded fund, or ETF. The ETF provides exposure to a segment of the market where I previously had none. It was a big hole in my portfolio, but it presents a great opportunity for long-term.
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Buying stocks based on one aspect of a company is a mistake, but often, investors get fixated. Income-focused investors, for example, often give dividend yield too much sway in their investment decisions. That can be a mistake. Take three of the highest yielders in the S&P 500 index as a starting point. Altria (NYSE: MO), AT&T (NYSE: T), and Healthpeak Properties (NYSE: DOC) have huge yields.
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The research firm has said that a stock market bubble, driven by investor excitement towards artificial intelligence, would drive the S&P 500 to as high as 6,500 by 2025, led by technology stocks. But starting in 2026, those stock market gains should unwind precipitously as higher interest rates and an elevated inflation rate start to weigh down equity valuations.
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