Amazing Journey of Diversification: How the Market loved me

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Have you ever been curious how some investors manage to create a well-balanced portfolio that delivers strong returns while minimizing risk?

For many years, I’ve been encouraging my mentoring clients in the Ideal Wealth Grower system to strive for a carefully crafted distribution of assets.

The goal has always been to balance risk while taking advantage of opportunities for growth. This distribution is not meant to be rigid but rather a guiding principle for building long-term wealth.

My personal approach focuses on achieving this balance, with an emphasis on residential real estate, gold, stocks, cash, and Bitcoin.

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I’ve been working on my portfolio for years, carefully crafting an asset distribution that I felt would balance risk and reward, all while keeping my long-term goals in sight.

I’ve always aimed for a mix of residential real estate, gold, stocks, cash, and Bitcoin, and over time, I built a strategy to stick to these proportions. It’s not easy to hit the numbers exactly, but I was determined.

My primary focus, as I’ve always said, was the residential real estate portion—65% of my total portfolio.

Back when I was getting started, securing that 65% in residential real estate required a serious commitment. The real estate market in 2019 and 2020 wasn’t exactly generous, and it took work to build up a solid foundation. But by 2021 and 2022, things started falling into place, and I was pretty close to hitting my target allocation.

Then, 2023 arrived, and let’s just say that life—along with some market shifts—had other plans. By the end of 2023, my portfolio distribution looked like this:

The Challenge:
In 2023, my portfolio looked like this:
📊 Real Estate: 74.94%
📊 Gold/Silver: 10.76%
📊 Stocks: 3.84%
📊 Cash: 7.69%
📊 Bitcoin (BTC): 2.77%

As you can see, despite all my efforts, the mix had gotten a bit lopsided. My real estate was still strong, but other parts of my portfolio, particularly stocks, had lagged behind.

However, I wasn’t planning to make any major moves in 2024. The real estate market was relatively stagnant, with modest price fluctuations and cautious buyer sentiment.

The overall market sentiment in real estate was cautious, with prices plateauing in many regions, especially after the pandemic’s craziness.

For example, in 2024, the residential market showed only small price fluctuations. Interest rates were high, keeping most buyers on the sidelines.

Sellers were hesitant, knowing they couldn’t easily get the prices they were used to in the boom years.

Transactions were few and far between. This wasn’t a year to make bold real estate moves. I figured I'd sit tight and let the portfolio ride for a while.

But, sometimes, the universe (or maybe it’s just the market) has a way of stepping in with a little help when you least expect it.

For me, that help came in the form of my stock portfolio. Now, don’t laugh—but my stock portfolio isn’t exactly what you would call “well-diversified.”

Typically, for an investor with a strong emphasis on residential real estate, diversification within the stock market would involve buying ETFs or index funds.

These funds are designed to provide exposure to a wide variety of companies, sectors, and industries, thus reducing the risk that comes with investing in individual stocks.

Most people would diversify their equity investments by choosing funds that track the overall market or specific sectors like technology, healthcare, or consumer goods.

This is the classic approach for those looking to avoid high volatility and protect themselves from the risk associated with any one company underperforming.

But for me, it’s been a different story. Instead of spreading my investments across hundreds of companies or opting for ETFs, I’ve chosen to concentrate on just two companies—Tesla (TSLA) and Palantir (PLTR).

My decision was based on high conviction in these two companies, whose technologies and missions I believe are positioned for transformative growth.

Instead of playing the traditional diversification game, I’ve opted for a more concentrated approach.

Why Only Two Stocks?

I’m not the first to concentrate my investments in just a handful of companies.

There are prominent investors who advocate for this, and one of the main reasons I chose to follow this path comes from the philosophy of investors like Steven Mark Ryan and Tom Nash.

These individuals argue that, in certain circumstances, focusing on a few dominant companies makes more sense than trying to diversify too much.

Steven Mark Ryan, for example, has often said that when you have a clear understanding of a company, its future potential, and the technology behind it, investing in a concentrated way can be incredibly rewarding.

He specifically focuses on companies like Tesla, which he believes is far ahead of its competition, both in terms of innovation and its ability to revolutionize the automotive and energy industries.

His philosophy centers around conviction in your investments. If you understand the technology, the market, and the future trajectory of a company, why spread yourself too thin by buying into hundreds of companies?

Tom Nash, another investor with a similar mindset, focuses on companies that he believes are uniquely positioned to lead their respective markets.

For him, investing in a concentrated portfolio allows him to truly understand the businesses he’s invested in, without the risk of getting lost in the noise of less-promising companies.

By focusing on a few, well-researched investments, you give yourself a better chance of seeing large returns.

In fact, he believes that large market returns don’t come from having a portfolio of hundreds of stocks, but from having concentrated, high-conviction bets on companies that are set to dominate.

So, for me, owning just TSLA and PLTR wasn't about being lazy with diversification; it was about making a deliberate choice to focus on companies I believe will be market leaders in the long term.

These are companies that align with my values and my vision of the future—Tesla with its transformative potential in the automotive and energy sectors, and Palantir with its advanced data analytics and intelligence technology.

Now, let’s see what happened by the end of 2024.

The Unexpected Shift: 2024’s Results

By the end of 2024, my portfolio had undergone a remarkable transformation. Take a look at how things evolved:

📊 Residential Real Estate: 65.00%
📊 Gold/Silver: 10.00%
📊 Stocks: 10.00%
📊 Cash: 10.00%
📊 Bitcoin (BTC): 5.00%

Incredibly, without making a single change, my stock portfolio grew from just 3.84% of my total portfolio to 10% by the end of 2024, a 204.31% increase.

Bitcoin saw a rise of 111.32%, and even gold/silver saw a solid 8.68% increase. Meanwhile, my real estate holdings had a modest increase of about 1.44%.

What happened here? How did this shift occur, despite my inaction?

Simply put: I did nothing, and the market did the rest.

The magic came when Tesla and Palantir, my two high-conviction stocks, experienced significant growth.

Elon Musk’s Tesla continued to outperform expectations, and Palantir, with its contracts and data-analytics focus, kept gaining attention.

The stock market’s enthusiasm around tech stocks, especially the way TSLA and PLTR performed in 2024, was the primary catalyst.

For instance, during Tesla’s Q4/2024 earnings call, Musk spoke about Tesla’s ambitious growth projections, and his confidence was contagious.

He discussed Tesla’s expanding global market, especially in electric vehicles and energy storage.

The market responded accordingly, and you could almost feel the market whispering,

"This is just the beginning."

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What’s Next in 2025?

Looking ahead, it’s reasonable to expect that stocks will continue to grow, especially with the optimism TSLA and PLTR have voiced in their recent earnings calls.

Both companies have big things on the horizon, and with Musk’s aggressive expansion plans, there’s potential for even more gains.

But that's the beauty of diversification. Even if stocks outperform, they don’t always stay that way, and that’s why I believe diversification is crucial.

The asset distribution I’ve built is a guide, not a rigid rulebook. While large fund managers like Cathy Wood at Ark Invest may make adjustments to their portfolios when a position grows too large (think of her frequent adjustments with TSLA),

I don’t feel the need to do that at my level. The key is monitoring things regularly, staying aware of shifts in the market, and having the flexibility to make small tweaks when necessary.

The key message here is to follow the old adage:

“Don’t change a winning team” or

“Don’t slow down a winning horse.”

If a part of your portfolio is performing well, don’t panic and make rash changes.

Let it do its thing and only intervene if your overall strategy shifts. For example, Cathy Wood made several trades involving Tesla in 2024, but those moves were in line with her long-term growth strategy.

In my case, I didn’t need to make any such trades—I let the market run its course.

Conclusion: Diversification’s Role in Achieving Your Goals

To wrap it up, the point is that diversification is a great way to balance risk, but it’s not something we need to constantly tweak.

Sometimes the market—or fate—helps us along the way.

In 2024, for instance, stocks, Bitcoin, and even gold all saw impressive gains. That’s a rare occurrence, and looking back at 2021, real estate did much better than normal.

The safety comes from having different types of assets that move at different speeds.

Sometimes, markets or events outside our control will give us that extra push toward our goals.

The universe, fate, or just pure market timing—who knows? But whatever it is, it’s nice when everything aligns just as you were aiming for.

Looking ahead to 2025 and beyond, the potential of Tesla and Palantir could shift my portfolio once again.

As these two companies expand and their innovations continue to disrupt their industries, it’s likely that they will become an even larger percentage of my portfolio.

While this might shift the distribution away from perfect balance again, I remain confident in the long-term potential of these high-conviction investments.

After all, the market doesn’t always follow a perfect path, but if you trust in the fundamentals and stay focused on your strategy, you can still reach your financial goals.

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