08-28-2019, 05:30 PM
(08-04-2019, 06:33 PM)fenders53 Wrote: The following is a heavy dose of my opinion as always. I have 27 individual stocks at the moment. I think about 30 is sufficient if you have a few index funds to go with it which I do. I sell covered calls against most of my positions, most of the time. Many expire every month so I have plenty to do.
I've heard people say about 10 stocks is enough to diversify. I think that is bunk. What if you did that a few years ago and selected T, MO, MMM, CVS and FDX in that small port? Those would hardly have been considered risky stocks, but you just under-performed the S&P 500 badly.
At 50 stocks you are just an index fund IMO. As long as you consistently get a total return that meets or exceeds the 500, then knock yourself out if you get some enjoyment out of it. If your results trail the 500, then your stock buying habit is costing you a lot of money over time.
Personally, my stock picking hasn't been all that awesome the past year because I bottom fish like many others here do. My conservative option selling monthly income has been crazy good and I am beating the index in total return by a margin, and it's less volatile for sure. When that stops working for me, I promise myself I will try to be objective enough to adjust my course gradually. When I buy or sell I try hard to live by the following rule. "Never do today what you wish you had done yesterday, last week or last month". I firmly believe that because in the past I learned it the hard way, repeatedly.
If you are making some value and deep value picks in the DGI space, doubtful that a one-year holding period will provide you with a meaningful appraisal of total return. Probably better to use a five to ten year yardstick. Certain sectors and stocks just go through unloved, undervalued phases. CSCO was range-bound in the 20s for most of a decade after the dotcom bust, and didn't become a market-darling cash machine (recent minor draw-down notwithstanding) until well after the Great Recession. People who bought lots of CSCO in the 20s are pretty happy today, even with the dip down from the all-time-highs.
I know I won't ever make a pick at the absolute bottom, as I can't time the market, but try to remind myself that so long as I got reasonable value for the income stream at the time of purchase, I shouldn't second-guess the buy. It's not easy to do if a holding drifts down a further 10, 20+ percent from the purchase price, as my main regret is not getting more income for the same price, but I try to keep from second guessing.