How The Average Guy Approaches Investing
The Average Guy Portfolio uses a core-satellite strategy: a diversified core of broad index funds forms the foundation, while satellite positions in individual stocks and specialized ETFs provide tactical exposure to specific sectors and themes.
This approach balances two goals: (1) capturing broad market returns through low-cost diversification, and (2) maintaining engagement with individual investment ideas while managing concentration risk. The result is a portfolio that is neither entirely passive nor entirely active—it reflects disciplined decision-making grounded in fundamental research.
The largest allocation is to broad U.S. stock market index funds, which capture the entire market:
Together, these holdings ensure that even if every individual stock pick fails, the portfolio maintains exposure to the overall market's growth. This is the insurance policy against portfolio-specific risk.
SCHD (Schwab U.S. Dividend Equity ETF) provides exposure to high-dividend-paying stocks. Dividends are a meaningful component of long-term stock returns and offer a form of income. SCHD focuses on companies with consistent dividend growth, emphasizing quality and stability alongside yield.
The portfolio has a deliberate technology sector tilt, reflecting both conviction in the sector's growth trajectory and recognition of technology's central role in economic innovation:
The rationale: Technology companies drive productivity, create markets, and tend to have high profit margins and strong cash flows. The sector's concentration risk is managed by maintaining substantial index fund allocations and diversifying within tech across different subsectors (semiconductors, software, cloud, hardware).
VXUS (Vanguard Total International Stock Market ETF) provides exposure to developed and emerging markets outside the U.S. While the portfolio is U.S.-centric, international holdings add geographic diversification and capture growth opportunities in developed economies and emerging markets.
QTUM (Invesco QQQ ETF Trust) is similar to QQQM and provides additional tech/growth exposure. The portfolio may also include positions in thematic ETFs or individual stocks that represent specific investment themes (electric vehicles, renewable energy, cloud computing, etc.) when conviction is high.
GLD (SPDR Gold Shares) serves as a defensive position and inflation hedge. Gold is negatively correlated with stocks in many market environments and provides portfolio diversification. It's held in modest quantities—enough to provide a hedge, not so much as to drag on returns.
While the portfolio is tech-tilted, it maintains meaningful exposure to other sectors:
This allocation reflects a growth-oriented posture while maintaining diversification. The overweight to technology is intentional; the offsetting underweight to defensive sectors is a bet that long-term stock market returns will exceed bond returns and inflation.
The portfolio has delivered different returns in different market environments. These real results illustrate both the power of long-term investing and the importance of emotional discipline during downturns:
| Year | Return | Notes |
|---|---|---|
| 2016 | 0.00% | Initial year, limited capital deployed |
| 2017 | +37.96% | Strong bull market, tech leadership |
| 2018 | +1.82% | Q4 correction offset gains, tech volatility |
| 2019 | +35.60% | V-shaped recovery, tech rally, Fed pivot |
| 2020 | +91.36% | COVID crash followed by recovery, tech outperformance |
| 2021 | +41.57% | Continued bull market, growth stocks strong |
| 2022 | -47.21% | Bear market, rate hikes, tech selloff, concentration risk realized |
| 2023 | +87.75% | AI enthusiasm, recovery from 2022 lows, Magnificent 7 rally |
| 2024 | +47.30% | Continued tech strength, AI narrative, market leadership |
| 2025 YTD | +22.83% | First quarter performance |
The portfolio's 47.21% decline in 2022 was the single worst year in its history. Why such a steep loss? Concentration in growth and technology stocks during a period of rising interest rates and inflation. The same tech tilt that drove 87.75% gains in 2023 caused the sharpest pain in 2022. This experience underscores why diversification matters—and why maintaining index fund core positions is crucial.
The lesson: Even well-researched, high-conviction positions can underperform dramatically in unfavorable market environments. Emotional discipline—continuing to invest through downturns instead of panic selling—is essential.
The stunning 87.75% return in 2023 recovered almost all of the 2022 losses and then some. Investors who panic-sold in 2022 missed this recovery entirely. This reinforces a central tenet of the Average Guy approach: stay invested through cycles. Market timing doesn't work; time in the market does.
The portfolio benefited from dollar-cost averaging—continuously adding new capital over time. In 2022, buying at depressed prices and then experiencing 2023's rally created outsized gains. New investors who added capital during downturns saw their contributions grow rapidly once markets recovered.
The portfolio doesn't have a rigid rebalancing schedule. Instead, it follows flexible decision rules:
These rules prevent the portfolio from drifting into extreme concentration while allowing conviction positions to grow.
The most important insight: The Average Guy Portfolio is one person's actual choices in real time. It isn't optimized with hindsight, it isn't backtested to perfection, and it certainly isn't guaranteed to work for anyone else. It works as a teaching tool precisely because it's real—wins and losses and all.
To see the current portfolio composition, live performance metrics, and real holdings, visit the portfolio dashboard. For more about the philosophy and motivation behind this project, see the About page.