how many stocks to hold in a personal portfolio?

Discussion in 'Risk Management' started by stockmarketbeginner, Nov 17, 2017.

  1. Hello,

    What is a good amount of stocks to have in your portfolio (ignoring transaction costs)?

    I was thinking maybe 20-30 would be good. That way you get diversification.

    Thank you.
    Last edited: Nov 17, 2017
  2. piezoe


    I have wrestled with the same question in regards to investment portfolios, particularly those designed to fund retirement. I can only say that you do not want to mimic mutual or index funds. (Why would anyone managing their own account do that?) If you don't have the time or knowledge to mange your own retirement account, by all means just buy index funds. The results will be mediocre, but that is better than horrible.

    If you are going to manage your own account, you want only a couple handfuls of stocks, the ownership of which you must combine with great patience. (You broker is going to hate you.) I think I have about 12 in my Roth IRA that I personally manage . It is up over 30% for the year. In the current world, two stocks have to form the backbone of any equities portfolio, one being Amazon and the other Google. Then add only dividend paying stocks beyond that, Make sure they are diversified, including diversification across national boundaries, relatively recession proof, and have a long history of rising stock price and rising dividends. Use your personal knowledge, and buy into things that you understand, avoid those you don't. Then sit back, be patient, pay zero attention to the daily market press, trust your own judgement, and ignore everyone else! Periodically reinvest your dividends. If uncertain what to do, hold cash, and wait until you have more confidence in your decision. Patience is the key.

    If you want to hedge by shorting, do not do it in your primary retirement account. Use a separate account. You could for example go long and short the S&P 500 by trading SPY. But do it in a separate account. And do not do it unless you have long years of market experience.
    Last edited: Nov 17, 2017
  3. Newc2


    I hold 1at a time. I flip it a day or 2 later and then move onto the next one
  4. Is this portfolio only a small part of your investments? I can't imagine putting all of your investment capital into one stock. I guess its possible. Maybe you set razor thin stop losses and hope the stock goes up immediately after you buy it.
    Newc2 likes this.
  5. Jack1960


    I attended the Bullet Proof seminar at The Arora Report. They have done a detailed analysis. According to Arora Report 33 is the optimum number if you have a large portfolio.
    Small portfolios should have minimum 9.

  6. Thank you for sharing your wisdom. I appreciate it.
  7. Thank you. So between 9 and 33. What is the general concept for a large portfolio compared to a small one? Maybe $100,000 or less is small and $500,000 or over is large?
  8. sle


    What are you trying to achieve? Match broad market exposure (an index fund will do it for you much easier)? Do you have specific factors you are trying to be exposed to? Do you have a volatility profile in mind?

    These sound like a couple of very arbitrary numbers. People spend a lot of time trying to compose good portfolios, it's hard work and can't be reduce to a simple answer. The process is part art, part science, but it definitely can not be done without knowing the desired risk characteristics and desired asset/factor exposures.

    PS. I think @globalarbtrader, who is a member here, wrote a whole book about it.
  9. ironchef


    Diversification - diworseification.

    IMHO if you want diversification, invest in index fund.

    You can get outsize returns when you concentrate.
  10. thanks. another way of looking at it. maybe do a mix of investing on individual stocks and then put the rest in an index fund.
    #10     Nov 19, 2017
    ironchef likes this.