10-24-2014, 10:29 AM
There are 10 GICS sectors and for diversification, an investor would be prudent to hold at least 3 or 4 high quality stock positions in each sector. We all know that sector performance is variable, monitoring various sectors weaknesses and strengths can help make good investing and buy & sell decisions. If you like sector ETF's like many of us do, that will add additional positions.
Many studies have been done regarding the number of individual stocks that need to be held in a portfolio to ensure proper diversification (30 seems to be the magic number), but rules and guidelines can be misleading. I manage 3 personal large blue chip stock portfolio's and those portfolio's contain more than 145 stocks (approx. 50 stocks/portfolio and some stocks are held in more than one portfolio). Because the portfolio's were built over a long period of time, I have no problem managing this quantity.
I also actively trade partial positions based on market conditions and apppreciated stock. I can do this in a couple of hours/day or a couple of hours/week. As other readers have pointed out, when you hold quality, the portfolio doesn't need to be tweaked that often.
M$$I
Many studies have been done regarding the number of individual stocks that need to be held in a portfolio to ensure proper diversification (30 seems to be the magic number), but rules and guidelines can be misleading. I manage 3 personal large blue chip stock portfolio's and those portfolio's contain more than 145 stocks (approx. 50 stocks/portfolio and some stocks are held in more than one portfolio). Because the portfolio's were built over a long period of time, I have no problem managing this quantity.
I also actively trade partial positions based on market conditions and apppreciated stock. I can do this in a couple of hours/day or a couple of hours/week. As other readers have pointed out, when you hold quality, the portfolio doesn't need to be tweaked that often.
M$$I