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How Many Stocks Should You Own?

Apr. 08, 2021 9:30 AM ETAAPL, AMZN, BRK.A, BRK.B, META, GOOG, GOOGL, KO, MSFT, SPY, TSLA, VOO, VTI673 Comments


  • Investors often wonder how many stocks are optimal for their portfolio.
  • It's a good question, but it may not be the right one.
  • What matters is what's in the portfolio and the level of concentration.
  • The right number also depends on a wide range of factors to consider.
  • A reasonable approach can make more sense than a rational one.
  • Looking for more investing ideas like this one? Get them exclusively at App Economy Portfolio. Learn More »

Businessman directing on his financial management.
Photo by hofred/iStock via Getty Images

You are probably familiar with legendary investor Peter Lynch, who gained his considerable fame managing Fidelity's Magellan Fund. The fund earned an annualized return of 29% during his 13 years running it, more than twice what the S&P

If you are looking for a portfolio of actionable ideas like this one, please consider joining the App Economy Portfolio. Start your free trial today!

I just revealed a brand new Stock Idea exclusively to members! It's a secular grower below $10B market cap that I just added to my portfolio. I believe the business has outstanding potential for the long-term and is currently at a great entry point.

I put my money behind my ideas and provide an all-inclusive access to my portfolio and all of my trades. We are in this together!

The portfolio has more than tripled the market since 2014.

This article was written by

My name is Bertrand Seguin. I'm a former PwC consultant and veteran financial executive in the video game industry. I've spent 12 years at Bandai Namco Entertainment, leading the Financial Planning and Analysis team in the transition to Digital, Mobile, and Game-as-a-Service. I hold a Master of Science in Management and Finance.

My portfolio is built to disproportionately benefit from sea changes in technology that disrupt existing financial models and create massive shareholder value. My investment plan and asset allocation are a result of secular trends I have identified (macro) and in which I take individual bets (micro). I invest with a very long time horizon (ideally 10+ years).

I am fortunate enough to have seen my strategy deliver outstanding results throughout the years. Discipline and consistency win the game over time. Unfortunately, many investors violate their own model or strategy when their portfolio performance is temporarily disappointing. I would rather sell too late than too early, so I tend to never sell. I let my winners compound to a significant portion of my portfolio and let my losers become insignificant over time.


All App Economy Insights contributions to Seeking Alpha, or elsewhere on the web, are personal opinions only and do not constitute investment advice. All articles, blog posts, comments, emails, and chatroom contributions by App Economy Insights - even those including the word "recommendation" - should never be construed as official business recommendations or advice. In an effort to maintain full transparency, related positions will be disclosed at the end of each article to the maximum extent practicable. The premium service App Economy Portfolio is a research and opinion subscription. I am not registered as an investment adviser. The majority of trades are reported live, but this cannot be guaranteed due to technical constraints. Investors should always do their own due diligence and fact-check all research prior to making any investment decisions. Liability of all investment decisions reside with the individual investor.

Analyst’s Disclosure: I am/we are long AAPL AMZN FB GOOG. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (673)

You can own any amount of stocks you want to own. Let's start with diversification. The academic literature used to say that one needed 40 stocks to be diversified but that number has been revised to 10 in the last 50 years. That is one can be "fully diversified" by owning 10 stocks in different sectors. Diversification is normally measured by standard deviation. Each additional stock owned lowers the standard deviation of the portfolio. However, the standard deviation curve is like an L. After the 10th stock purchased, as outlined above, there is very little benefit of lowering the standard deviation. (lowering the risk of not being diversified). If one does not understand the stock market, has very little training in, doesn't have time for studying it, etc. then the best approach to stock market investing seems to be the John Bogle approach or just invest in an index fund. Over a long period of time you will do better than most other approaches. The Peter Lynch example in the article is an example of a manager that did better than his peers by picking better stocks. Peter Lynch was required by law to keep 200 stocks in his Fidelity Magellan fund but he bought high percentages of the stock he really liked. And it paid off. Moving on to less diversification. Bill O'Neal of IBD fame and a great investor, says that owning only 5 stock in companies that one knows very well is better than a diversified portfolio for investor with a net worth under 1 million dollars. It seems that the better one is at trading/investing and understanding one's stocks, the more likely one will outperform the index fund approach.
allday1234 profile picture
Never have been a believer in what many of the so-called experts maybe successful experts who claim that they know how to make one a successful investor as they are only publicising what has worked for them. Does it mean it will work for me or you? Well, NO!! It can give you some groundwork as to some ideas about how you go about making investments I believe you should have a plan of some sort, and then work on that plan.
making changes (hopefully small) to correct mistakes in how your plan is working. In my case I invest in stocks that pay dividends. OK that does limit me but is what I chose, and I have some rules that govern how I make choices, also about when to buy and when to sell. This option is just an example and the number of different stocks you own is entirely up to you.

@hawker5151 This is a brilliant comment. If not the best I have ever read, it is certainly one of the closest.

Having said this much, I have to add that I would never adopt your way of thinking under any circumstances.

Why not? Because my only interest in investing is to develop a reliable income stream that rises faster than inflation. This may, on occasion, involve accepting a lower rate of return than a focus on total returns would require. That is a price I am willing to pay.
Monday down after a FED member spoke out of line on rate hikes causing market to fall. Today the market investors shook off what he said. My Portfolio closed up 1.04% which was nice. Optimistic. See profile
The key to diversification is to hold stocks that represent growth areas within each sector - pick the leader with a solid balance sheet in each of the sub sectors- here are my favorites within each of the 11 sector spiders -

XLF - Money center banks (JPM), Regional banks (PNC), Investment banks (MS), asset management (BLK), Insurance (BRK/B)

XLK - semiconductors (AMD/NVDA), semiconductor equipment (LRCX), Electronic design automation (SNPS), storage (MU), application software (ADBE, INTU, CRM), Cloud computing (AMZN), mobile computing (AAPL/QCOM), networking (CSCO), databases/operating systems/Analytics (ORCL/MSFT/SNOW), Consulting (ACN), FinTech (MA), Payroll & HR (ADP)

XLC - Social media (META/GOOG) Streaming (NFLX), Video gaming(ATVI), cable/internet (CMCSA), theme parks (DIS), cell phone providers (VZ)

XLI - Aircraft mfg (BA), industrial automation (HON), Logistics (UPS),
Defense contractors (NOC/LHX), infrastructure (CAT), farm equipment (DE), airlines (LUV), transport (UNP/EXPD), tools (SWK), Building products (BCC)

XLV - Pharmaceuticals (ABBV/LLY) , medical devices (ISRG), health insurance (UNH), biotechnology (MRNA), pet meds (ZTS)

XLP - beverages (SBUX/KO), snacks (PEP), toiletries (PG), staples retailers (COST), beauty supplies (EL) , beer & wine (STZ), pizza (YUM), pet food & other staples (NSRGY)

XLY - Home improvement (LOW), Electric vehicles (TSLA), footwear & sports apparel (DKS/NKE), restaurants (CMG), hotels (MAR), retailers (TGT), home builders (DHI), automobile parts (ORLY), home appliances (WHR/AOS), cruise lines (NCLH), travel reservations (BKNG)

XLU - Energy utility (NEE), water utility (AWK)

XLB - Aluminum (AA), steel (CLF/NUE), copper (FCX), lithium (ALB), industrial gases (LIN), Paints (SHW), chemicals (DOW)

XLE - refiners (CVX/COP), oil services (SLB), pipelines (KMI)

XLRE - cellphone towers (AMT/CCI), Datacenter (EQIX), warehousing (PLD), shopping malls (SPG)

Not all the sectors move in tandem. BUY only when a sector is in the dumps and none of the companies operating in that sector are doing well.

When all sectors are down, just buy IVV or SPY or ITOT 😀
SleepyInSeattle profile picture
@Sleepless@FED Good choices. Thanks for sharing.
@Sleepless@FED What you outlined is a great approach. My only suggestion is that you change your handle to "Asleepattheswitch@Fed."
wildpitcher profile picture
I try to do a similar thing with best stocks in sector, but I have picked somewhat different stocks.

Small point: ZTS is not a consumer discretionary, nor is it pet food. It is classified as Healthcare and provides animal meds.

Jim Van Meerten profile picture
I read an article a few years ago in the Financial Times about a study by the London School of Economics that found that the more successful hedge funds tended to hold the fewest number of positions. After pages and pages of formulas and analysis they came to a very simple conclusion. It is easier to find 10 good ideas than it is to find 100 good ideas. Over my past 52 years of investing my sweet spot is 20 positions. As the value of my portfolio grew so did the size of my positions. 20 good stocks of equally sized positions.
allday1234 profile picture
@Jim Van Meerten
While I respect your position and thinking along with the research that went into that thought process I have to at least have some hesitation in having full agreement for the following reasons.
I would agree if the markets were based on a perfect storm where you indeed knew the outcome of such investments without the intervention of untold catastrophes that can occur such as COVID. Using that only as an example it had untold massive effects on the profitability of major countries around the world and while we all believe that we have companies most all suffered financially and many if dividends were paid actually discontinued and or cut them.
We all can believe that with a little knowledge we can pick the best and or at the very least half of the potential winners.
My view is of course somewhat different since we all have various knowledge backgrounds and ideas about investing and while your sweet spot may be 20 positions, it is a number that you are comfortable with and that number may include what you have time for to research and make decisions on. I believe that the number of positions one has should be left up to the particular investor and not some study of the so-called experts who do not know the background of the investors with regards to the capital they have to invest and their overall knowledge and time to devote to the activity such as the type of investments to which they are engaged.
I have 30 to 35 presently, but have had as many as 60 and I know of some that have more than that and appear to get along quite well. Their involvement of course is based on the tie they have and everyone is different. Any number that the particular investor can handle is entirely up to them and not me and or some expert that at some point said I must do a study to find out such as:
How many investors did they study, what were their backgrounds, and what part of the world did the live in or did they just pick out a number and said " We studied 20 groups of 10 people from different walks of life who invested some had 5 investments and some had 40 and we did not look at the financial aspects of each but in the end said 10 sounds about right without knowing the success rate of each individual investor.

@Jim Van Meerten To be sure, it is easier to find 20 good ideas than 100 good ones. But betting 20% of one's net worth on every one of those positions is a really big bet. This is where one's personal taste for risk truly cuts in. I'm afraid you left me at the station.
Tippman profile picture
@Jim Van Meerten
Keep it simple. Don't gamble. If you have 20 stocks you are IMO
"gambling" because you don't know which one is the best.

Also: why 20? If I where you I'd select a top 5 or a top 3 of the
BEST investments from your list of 20 and make concentrated

In other words if I where you I'd sell the rest and put 'da money' in
'da best'. To make things easier: start with selling all the positions
that don't pay dividends. (maybe ALL 20?) Also ask yourself the
question with each stock: Am I gambling here? If your honest answer
to yourself is "yes.." Then sell the stock. If the answer is "no", plus
they pay dividends then you might consider to put it on your

Why is "a top 3" or "a top 5" better then "a top 20"? (I hear you ask)

Answer: You avoid the losers and you selected the winners. And also
it's much easier to follow 3 or 5 stocks then 20. Following 20 stocks
sounds like a fulltime job to me.

Just my honest opinion. Up to you of course. (my stockportfolio holds
only one line-item)
5ofDiamonds profile picture
@App Economy Insights

An alternate question could be:

If you have $20,000 to invest and your only choices are $UNP and $CSX, in the same railroads sector, will you choose to:

1. Invest all in $UNP as it historically performs better than $CSX
2. Split 50:50
3. Split 70:30

The answer to your question lies therein. Some prefer 1 to minimize sector concentration, some 2 to spread risk equally, and some prefer 3 as "relative concentration based on conviction".

I have a personal tendency to over-diversify, based on the price that the market offers at different times.
wildpitcher profile picture
>> Re: "If you have $20,000 to invest and your only choices are $UNP and $CSX, in the same railroads sector, will you choose to:
1. Invest all in $UNP as it historically performs better than $CSX
2. Split 50:50
3. Split 70:30" <<<<<<<<<<<<<<<<<<<<<<

I would (and have) invested it all in UNP.

I try to avoid having multiple stocks in the same business, to avoid the sector concentration and to avoid having 100 stocks in my portfolio. I do have some exceptions to that, mostly to get reach within multiple sub-categories (like with REITs in several property categories) or in banks, which I diversify by size, geography, and business focus.

I wouldn't criticize anyone who did one of the other three choices, though.

5ofDiamonds profile picture
@wildpitcher Right. Lets say that you have that $20K today, and the day to invest is tomorrow. You know today that you prefer $UNP but tomorrow, $CSX drops 20%. Will you let it go?
wildpitcher profile picture
>> Re: "Lets say that you have that $20K today, and the day to invest is tomorrow. You know today that you prefer $UNP but tomorrow, $CSX drops 20%. Will you let it go?" <<<<<<<<<<<<<<<<<<<<

I tend to develop an opinion about something I want to buy and become comfortable with a price range where I want to buy it. Then I buy it. In your hypothetical example, I likely would never make it until tomorrow if I had the funds today. I likely would have pulled the trigger on UNP already.

If a stock I own or am considering buying dropped 20%, that would cause me to go "whoa, what am I not understanding here?". That would likely cause me to slow down for further study. The old adage of the "wait 72 hours after such a drop" would factor in here.

In a more reasonable scenario of a 5% drop after an earnings report, if my investigation indicates people are upset about one quarter's results for an otherwise strong company, the drop could induce me to add to an existing position if I could find something in the portfolio I liked less to sell/trim to fund it.

I have no way to know whether UNP will outperform CSX over the next 5 years. The past history of the two stocks is really quite meaningless for assessing that. All I can do is ascertain that UNP (or CSX) has the properties I'm looking for in a stock, buy it, monitor it, and change horses if I'm not getting what I expected.

TravisD profile picture
I started a portfolio in August with 20 stock picker recommendations which were very tech-heavy, so my portfolio is down roughly 23% in just the last few months. I've decided to add several dozen smaller positions in good companies (SIX, HD, TSCO, etc.) to diversify away from tech. Only problem is, it will take me a couple years to have a nice evenly distributed portfolio, and who knows if there will be a great Nasdaq rebound. Not sure if I should be investing more into some of these good tech businesses or just let them simmer for now? An example, MongoDB, a great company terribly beaten down, should I DCA or continue to diversify into these other areas since I'm already overweight in MDB? Investing isn't easy, but at least I learned one thing: if you sell a stock, it will go up, so don't ever sell. Lol
@TravisDover Always diversify. Never bet too heavily on one asset class and especially in one sector of one asset class.
TravisD profile picture
@PreCambrian Thanks for the injection, just what I'm coming to understand.
allday1234 profile picture
So where does the debate end? We ll have different ideas shared that indicate success and maybe a few failures but really failures are not discussed because they do not really add anything to the discussion. My answer is that the number of shares is dependent on what works for you! It is not my decision and if you read the comments, some ideas are pushed and some just present their case on when to start, when to stop, and what to invest in.
I do believe in having some sort of plan or method for investing, but again what works for me may not work for you as only you know.I am a dividend only investor and average about 40 share + or - 4 and I have a method that works for me. I can say that my dividend only investing also has bout $250 K in cap gains if sold today , but as a dividend ony investor I continue to add, that does not mean I never sell as I have made several changes as well and my plan includes an exit plan. Yes the recent pullback in the market is troubling and I have see my total value tumble about 100 K, what I can say is that my dividend in has actually increased although not much but is averaging about 130k annually and with no mortgage, no car-payment and no real debt + S.S. I am ok,
The real key is to pay attention. I have no dry powder, stay fully invested and do not chase corrections or pullbacks. I do research some stocks that many would not touch and if added I call them speculative and usually start out with a small position. In trying to capture the supply chain issues I have ZIM and EGLE
less than 100 shares each and a couple of speculative stocks that has worked for me is NVEC now at 404 shares and CTO now at 438 shares and CTO just announced a 3 for 1 stock split
"Investors of record at the close of business on June 27, 2022 will receive two additional shares for each share held as of the record date."
this will come after the next dividend payment of $1.08 which was increased last QTR.

Anyway my 2 cents, having a plan regardless of type and paying attention are secrets to success..

How many stocks to own is dependent on the responses to the following questions -

(1) Is your active portfolio management (investing in individual stocks by yourself instead of buying an ETF or a mutual fund), beating the benchmark index on a consistent basis?
(2) Are you better off owning a fund/ETF instead?
(3) Are you mistaking luck for skill?
(4) What tools do you use to identify undervalued stocks?
How do you arrive at the intrinsic value of the stock you wish to BUY/SELL/HOLD?
(5) Diversification- Are you invested in all the 11 sectors of the market?
(6) Do you have the time, energy and resources to monitor developments at say 25 different companies
(7) How often do you rebalance and on what basis?
(8) Is the stock you own belong to a company that has consistent revenue and earnings growth? Are they able to beat Wall Street analyst EPS expectations?
(9) How is the forward guidance provided by management? Are they confident of achieving their goals?
(10) Is the overall market in Risk-On or Risk-Off mode?
(11) Are you hedging within your portfolio? Do you own a Microsoft/Cisco (BLUE CHIP & profitable tech) along with SUB PRIME companies like Snow Flake or Palantir that have good growth rates but are yet to make a profit
The combination of ERP (Equity risk premium) and RFR (risk-free rate - proxy for this being the yield on 10-yr treasury) drive the discount factor that is used to compute the Present Values of future cash flows for companies
(12) What are the Financial leverage (%age of debt in capital structure) and Operational leverage (%age of fixed cost in operations) that drive the Break Even point for the companies you own?
(13) Are the companies enjoying pricing power, expanding market share and have strong margins?
(14) Can they pay a dividend and buy back stock (2 avenues of return to share holders), if not are they earning enough ROI on cash reinvested in business ?
(15) Am I using fundamental analysis to identify the stocks that I’m going to buy? Am I using technical analysis to time my entry/exit into/out of the stocks?

How does my portfolio align with my RRTTLLU- risk taking ability & willingness, return expectations, time horizon, tax situation, liquidity needs, legal situation (like estate planning) and unique requirements
allday1234 profile picture
Well let me answer the questions since it was directed towards me.
(1) I own no ETF and I do my own research and make my own trading decisions.
(2) Since I do not own an ETF there is nothing to compare it too.
(3) Since I make my own decisions and have no economic background and did not work in the financial industry. One would have to have significant luck to achieve portfolios valued at 1.9 M without winning the lottery or receiving a large inheritance. While I have had failures I have also had great success, so deciding if it is luck or skill would depend upon YOUR point of view.
(4) No specific tool's other than research of the stock I am interested in, however the stock I purchase must pay a dividend. I do not subscribe too any newsletter or analyst service.
(5) Since 10 of my holdings are CEF's I believe that I currently am invested in 11 sectors of the market , I usually have 40-45 positions but I don't really care if I have all sectors covered as it is not important to me, as my concern is not to have a stock for all sectors.
(6) Well in my case the answer is yes, some positions require more active management but I have been able to do so. If the workload requires more active intervention I make the necessary adjustments
(7) I have no set time to rebalance, but have a written plan that I follow to decide when to sell Based on Cost basis and current company statements, This includes an exit plan for positions which involves time and percentage which is based on current market conditions.
(8) As long the are positive in stock growth and continue to pay a dividend I do not pay much attention to EPS, however negative growth does play a higher level of research and if a dividend is cut depending on the reasons and the amount of cut may be a total sell or a partial sell.
(9) Company stated goals are usually always positive , with negative aspects kept minimal. I look at yearly reports and quarterly reports.
(10) I don't make such analysis
(11) The answer is NO!
(12) I do not go that far into my research as I feel it is an overreaction. I am not an analyst, make no recommendations and do not sell my services to anyone. I am always willing to share what I do, but investing is a personal choice and what I do does no guarantee success.
(13) Not really of interest to what I do.
(14) They sometimes will as you stated but it is a case by case decision for me and if held, I may sell a partial or all or not invest at all.
(15) Everyone invests differently, I do not tell others how to invest their money. The tools they use are strictly their own and how they use the is strictly of their own choosing.

While you may not agree with my process, it works for me and that in the end are my goals. My only advice is to pay attention, you do not have to be a skilled investor to be successful, ( I am self taught ) but you should have some knowledge about what you are doing and if failure occurs ( and it will ) you correct them. I do not double down on corrections or pullbacks and I stay 99% invested at all times.

smokyy profile picture
Today, 12:02 AM

Comments (359)
(OPY) Oppenheimer's has had huge volume all week, a new buyback for twice the normal amount or 8.2% of all shares should be announced within one week since that's really 14% of the float look for a 12% pop by the end of the month, and "bud" to add even more shares a lot more, if they get put into the mix of a rebalance of one of the indexes with there higher trading volume this year, then look for an 18% pop!
The cheapest stock today, $32.50, which I have ever seen. The risk maybe 10% downside in a full market crash, but 200% upside now great risk-reward and liquid stock. Buying stock back at 60% of the tangible book value, is printing money for "bud" and shareholders! With rates going up and up they just sit there now and print money!
Real book is $62 plus and growing, if nothing else yes the name is worth $100 easy! be greedy when others are fearful!!

I own just one stock after this week OPY! and Options
I am "short" like 5 others, MSFT, TSLA, LYFT , Wayfair and MS as a hedge for a Full market crash and to counter super long on OPY!
SleepyInSeattle profile picture
@smokyy "The cheapest stock today, $32.50, which I have ever seen..."
-- I agree, it's low, yet..... OPY went down to $18.03 in 2020 and to $30.65 in 2021 -- it could still fall a lot more than just 10%.
-- Conversely, one may argue that OPY has a good upside potential. But... I am not convinced. It had a strong uptrend until summer of last year when it peaked at about $54.17. Since then, it's been sliding down to 32.50.

-- Perhaps it will see the low 18s to 20's again.
smokyy profile picture
@SleepyInSeattle it has grown book value (cash) by over $20 since then and the earnings are clearer now much more than anyone ever thought so it is much much cheaper than when at $18 in 2020.
g23riel profile picture
Every single decision regarding the portfolio should come down to having a plan for the holding which also does include whether it is diworsefication, and also whether one can even keep up with the holding news and decision whether to sell, hold and buy. A single large holding ETF like EQAL can establish a huge amount of diversification.
How Many Stocks Should You Own? It's not the quantity, it's the quality.
@Aristocrat & Dividend King Investor
If only one company could be chosen. Which one? I would chose BRK.B but that is sort of cheating because as you know BRK.B is many corporations under one umbrella. Same could be said about MSFT. One MSFT should equal at least 4 minor tech companies on the scale of diversification.

Some ideas:
---Representation of companies from all sectors
---Pristine balance sheets
---Companies not likely to go into bankruptcy/Credit ratings A or better
---P/E < 20 or <30
---PEG < 1.0 or 2.0 (Lynch style)
---Gross margins above a certain threshhold
---Supreme long term revenue growth (which should allow growth companies back into the game cause most of them will not qualify at P/E<20)
---lots and lots of other criteria.

Quality is a favorite of mine (whatever it means). I own Visa and MasterCard mainly due to quality considerations but perhaps I should have owned AMC instead. AMC is clearly better than V and MA in the 2 year chart albeit arguably lower on quality.

I think longer term revenue and earnings growth prevail but it takes at least 10 years to manifest a reasonable correlation. Shorter term is anybodys guess. The best momentum rider wins I assume - and I am a lousy momentum rider - always oblivious to the dominating ideas of present time. Inflation for instance...On everybodys mind but mine😒 I should have thrown out everyting hyper growth and focused on everytning tangible, cyclical and low P/E. Then at a certain point fill up back into growth sectors. The inflation scare made it fashionable for companies to actually possess positive FCF/earnings but strangely some companies were judged much harder than others🤷‍♀️ The PEG ratio is based on forecasts of future earnings which makes these ratios not very reliable due to the current fashion spilling over into the predictions. For instance: "Company X has had a fine revenue growth the past 5 years but we expect that to slow down considerably due to XYZ". Or the opposite: "Company X has had basically no revenue growth over the past 5 year period but we expect that to change dramatically due to changes in policy regulations/commodity prices/ESG demands/end of pandemics dynamics/some new tech they developed which will almost certainly break through and bla bla bla".

All in all P/E compressions and expansions wreak havoc among stocks shorter term as companies fall in and out of fashion/groupthink. All companies are like that: Deere for instance. A couple of years of standing still while more popular stocks advance. Then a doubling in a short amount of time. Or BRK.B. Valued at 175 in the dot.com-summer of 2020. Dead money for sure! Now not so dead anymore😒😊 Now ARKK is dead money being ridiculed by 9 out of 10 experts.

The most general rule: If a stock doubles within a year it takes on properties of momentum and almost everybody agrees it has a long runway ahead of it. They are there because the momentum changed from negative to positive. They were not there a year earlier. Running with the herd. Probably a very profitable approach too if able to jump from wave to wave and become the best stock market surfer of all time!
You need only one, it's called VOO. You never have to rebalance and never have to watch it.
@ex institutional listed derivatives analyst

There can be only one - Highlander movie😎
@App Economy Insights
Now lets see. I own 12 stocks currently with PYPL being the worst one. Therefore I can safely conclude 11 is better than 12. 4 more of my stocks are in the red so the correct answer is: 12 - 5 = 7 stocks is the optimal number for me. Problem solved. Now I could of course sell my red positions and use the proceeds to buy my green positions. That would be logical but I am not particularly logical. My PYPL position is still down 53% on my cost basis one year ago. Clearly at the very least PYPL should be thrown out but I have zero confidence in my market timing abilities so I will simply practice non-action. What I should have done is buy Halliburton two years ago but no no...too dumb to do that. Two years ago Halliburton was a loser in the 2-year chart. Now it is a supreme olympic gold medal winner in the 2-year chart. I did not see that one coming but I dare not sell PYPL to finance buying HAL. Sell my worst loser to buy the foremost winner in the 2-year chart...too risky for me. I might as well hang on to my losers. Investing is so difficult 😒😒
Dennis O profile picture
@A norwegian guy I fear you would go nuts with my 115 positions. Buy dividend payers, drip, buy a lot in each sector you like, go heavy in hard assets, sort it out later. Don't worry about the small stuff, stocks go up and down every day, but safe dividend payers, don't get into the daily weeds of Mr. Market. Been doing this many years and I have prevailed quite nicely. Life is Good- Dennis
RickJensen profile picture
@A norwegian guy
I have only 5 and I expect them to be baggers from here.

If you own more than you can research, you are just gambling. And more stocks than you can know automatically limits Alpha returns (Unless the market as a whole does well, but then that's Alpha)

It's not how many, it's the "right ones".
@Dennis O
115 positions!! That`s what I call diversification. I have "holes" in my portfolio as I have not systematically covered all sectors. Then again some of my positions cover a whole lot of ground and are quite diverse on their own merits. Typically I have avoided dividend payers with stable revenue and high yield which obviously produced some headwinds for my portfolio lately. Lets put it like this: Sea Limited has not exactly been a vehicle for Alpha these past 6 months (understatement). Now it is down to only 3% of my portfolio...To *really* diversify I could buy 400 out of the 500 stocks in S&P500 but then again Charlie Munger would not be too impressed with that strategy although it could be said to be tailor made to fit my level of investing expertize: Only slightly above a green belt. Definitely not a black belte...yet!

I'm not always true to my username.
Jim Van Meerten profile picture
Keep it simple ---- it's much easier to find 20 great stocks and monitor them than it is to find 100 great stocks and monitor them
allday1234 profile picture
@Jim Van Meerten Depends upon the individual and what stocks they own. I have seen some with 10 or less with significant troubles because they have no plan on what to do.

Their issue not mine.

RickJensen profile picture
@Jim Van Meerten
I'm doing just fine and I have only 4 core positions.
SleepyInSeattle profile picture
@allday1234 Agree. Depends upon the individual and what stocks they own.
kd-eu profile picture
3 (Three)
Update of my post of 4-10-2021 below (then 4)

Nice to after so many months an SA article still accrues comments ...

Since 8-15-2018 it was only ASML to me, thinking to nut seek or pursue further, 'a man has got to know his limitations'. 'If Bezos and other CEO's concentrate heavily who am I to think I'm smarter?' was my thinking. And Charlie Munger: '3 is enough to become rich'.
www.youtube.com/... "Charlie Munger: How To Achieve A 20% Return Per Year"
A.o. "you only need one cinch". The video says it all in 10.26 minutes.

Just "Excellent Companies", no fuss, no side shows, just stick to the plan, INVESTING is one 24\7\365 MARSHMELLOW TEST for adults in Munger speak ;)
On not limiting to 1 excellent company I expanded to AMZN, to TSMC. Against my better judgement 3 would not be enough, and in search of diversification to Tencent, PRC, as the 4th.

The political risk in PRC I weighed wrong. Luckily long only 1 call option, it went down 98% as I was just probing how it would behave after investing in PRC.
So to me the answer imho became 3 "Excellent Companies" again, stead of 4 due to the 2021 tech crackdown in PRC.

I still owe @a norwegian guy an apology for not investing in Sea on his advice.

But on second thought I am just sticking to my 3 "Excellent Companies", and forget about a forth for a few years. Even it is means missing out ..
The 3 made me more thans 200% in 24 months over $500K, and each of the 3 Excellent Companies does not look like slowing down for good.
200D SMA comparing to current price at approx. 5% over 200D SMA not nice to endure, looking nice on 2 out of the 3 as a prospect. ASML at 39% over 200D SMA, what is very nice now, it will not last continously....
downs, but ups also, a decade of roller-coaster?
it seems volatility does not augment risk, just more volatility..

kd-eu, long on ASML, AMZN, TSMC
allday1234 profile picture
There will always be a discussion about the number of stocks to own , how many in each position and are there growth stocks , dividend stocks , a combination of both and there is no clear answer , however it does depend on what your goals are. My main goal was to have enough to live comfortably when I retired and in addition to my stock portfolios to ( there are 3 ) to enter retirement with no debt. It should also be noted that I also have a separate business that for the most part is almost a complete opposite of my stocks and as such that business is farmland and I share the profits with the individual that farms it . The business is kept completely separate from my investment portfolios as far as how it is run, my expenses and so forth. So I am going to specifically discuss my stocks When I first started out I started with CEF's , they paid usually a great dividend and paid monthly and I used the dividend more to buy more shares and to invest in other CEF' I currently have 13 and today I have 44 different positions All pay dividends and I am out here every day or almost and some have more. The number is how many you can control and I have found that CEF's require minimal control. I have a plan I use for buying and selling and the reason for all dividends is I do not have to sell some of my best stocks and pay a cap gain tax on such gains. I do not tell others how to invest or make recommendations other that to PAY ATTENTION. I am 99% fully invested and not have been at this for 28 years, I am self taught and do not subscribe to any news letters or stock analysts I am 76 and had no experience in investing other than a 401k, But I had the time and when I worked I made the time. I retired at 62
Today my annual passive income from dividend stock's is at 130k+. I have made a lot of mistakes and when they happen you correct them and move on.
Covid was a major challenge and there are no rules you just have to do what is right and yes in some case you will take a loss. I wish there were answers for everyone! There are not Hope and Pray is not an answer, but as stated PAYING ATTENTION is key . There are no guarantees

Wishing the best for everyone.

g23riel profile picture
Buy 1-2 SA services and they will find and monitor the stocks for you. There is no reason to limit buying only the stocks that you can analyze and keep up with the news when the SA services are cheap for the utility that they provide. You are better off using the time saved, some other ways. I have 2 SA services that complement each other, and both services have hawk like oversight of the holdings.
@g23riel which ones?
g23riel profile picture
@Arjoyrin Cyclical Investor's Club (CIC): Cory keeps a vast database of different types of stocks and his portfolio is very well rounded. Very cheap service for the quality that it provides: set the price, buy, hold and then set the reserve and sell. Cory handles all the processing for you, this is the best service that I found for beginners. The Natural Resources Hub, run by Laurentian Resources: an amazing service geared towards asymmetric investments, mostly geared into natural resources, but open to any strategy where the investments are much more likely to overperform than not. Based on the numerous services that I have tried, I believe it is a better value than the others, although it costs more than the bargain services. I have been actively investing for a few years now, TNRH is my go to place for expertise involving most of my investments. I don't earn any kick-backs from recommending these services, please feel free to message me if you have any questions.
SDS (Seductive Dividend Stocks) profile picture
Thank you for good article.
Chip Chipperson profile picture
Buy FNILX (S&P 500) or FZROX (total market) as a core, add some FZIPX (Mid & Small cap fund) and FZILX (International)...ALL are ZERO fee through Fidelity. Adding FTEC for some extra alpha helps too. If the best money managers in the world underperfom the markets on average, you'll do way worse. Take the guess work and headache out of it.
01 Aug. 2021
Buffett mentioned 20 good stocks and a few great make us VERY RICH.
Lynch mentioned 1400 stocks because he did not want to miss the good buying opportunities.

BUT, I think there is one thing that you missed about Lynch' portfolio. If my knowledge serves me well, most of his stocks did not survive or did horrible nowadays (Fannie Mae, Toy R Us...). In the order hand, Buffett's best choices are still doing great and dominating their industries (KO, MCO).

So, I would say that Peter Lynch made great buying opportunities but Buffett made great investments.

Buffett's pick a company because he could see that after 100 years, people would still use the product (KO - 33 years since his investment, 129 years since its foundation).

Picking 1400 stocks vs. 100 stocks vs. 20 stocks, consume the same amount of time and have the same amount of risk. It is just the fact that: "Which companies will survive and be prosperous for 100 years"

If you want to stay wealthy for the rest of your life and your next generation, pick stocks like Buffett, because your children won't be able to handle that many stocks like you did (Magellan failed after Peter Lynch retired).

And don't forget why Gates, Bezos, Musk... are the richest. Simply because of their ownership of the company. And ownership is simply the amount of shares. Do you have more shares of a company when you invest in 1400, in 100, or in 20?

So, if you can pick 3 great companies and invest your fortune, you have the best of both world: great return + great ownership.
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