Food Innovation

[gfp927z]

Yes, those sectors should outperform the S+P 500 over the longer haul. One problem though is their extreme volatility, and they can also go in and out of favor, which adds to the wild ride.

Rather than trying to guess whether growth or value will outperform next, the S+P 500 contains both, and it's also a much smoother ride, which makes it easier to 'stay the course'. Buffett says the key to investing success isn't intellect, but temperament - the ability to not be psychologically fazed by market swings. From my experience, the emotional side has always been the biggest challenge.

I figure having some in sector ETFs and individual stocks makes sense, but the bulk of the stock allocation goes to the broad index ETFs. After the big drop the trendy/cool sectors are looking tempting, but with interest rates set to rise for several years, that should be a headwind for the high growth side, plus their valuations had gotten stratospheric, 100 times sales, etc. Still, it's tough to not be tempted by these extremely well positioned and exciting sectors.