Weighting

[hendi_alex]

In my opinion, diversification is way over rated. Especially when such is often interpreted in the context of a portfolio which is 100% invested in equities. Having a portfolio of different tickers from various sectors gives significant protection from company specific risk. But a portfolio of correlated assets, even if diversified among different sectors, gives very little to mitigate broader market risks. I used to expend a good bit of effort in trying to balance the portfolio between domestic and foreign, large cap, mid cap, small cap, spread between at least 8-10 investment classes. After the experience of 2008 and 2009, that effort has been tossed out. Now just a mild diligence is maintained, such that single tickers and single sectors don't get way over sized. Also, we used to hold at least 50 tickers in the portfolio, using the small basket approach to hit any sector, where 3-5 companies would represent exposure to any one sector. I'm comfortable holding under 20 tickers, and depending upon the selections, could be comfortable with as few as 10-12 positions.