How many stocks in a portfolio?

[rayray]

I wrangle with this in my head every so often. How many is too much? Does buy and hold prevent me from fine tuning my stock selection? Does the feeling of enough is enough prevent me from a good stock investment?

Personally, I own and feel they are enough

59 individual stocks

6 mutual funds

Once I retire the mutual funds will be traded out and into dividend paying stocks...I keep thinking my gawd as time moves forward I'm going to end up with 100 stocks!!

In fact, I could easily buy and hold 100 stocks because there are great investments out there--it's just too much work.

SA poster, as10675, a very successful investor in his own right has over 300 individual companies! It might even be reaching 400....yea...395!! Just checked....That number gives me a headache--but when you look at his portfolio--it's not like he has bad investments.

A friend of mine is probably just as successful as SA poster as10675 with 29 stocks and about 10 to 12 years younger to boot. So, owning a lot doesn't necessarily mean you'll get a lot. But both of these guys have A LOT lol...both strategies apparently work. The one thing they have in common are good stock selections--one is just a lot more concentrated. If both just did nothing neither would go broke even in a massive downturn.

Here's a great read.....Chuck Carnavale

https://seekingalpha.com/article/4280523...ied-part-3

[crimsonghost747]

Personally I like to read through all of the quarterly reports of the companies I own. Of course I don't read the whole report but I'd say I spend maybe 15 minutes eyeing it, plus then reading through the Q&A of the conference call which is probably another 10 or 15 minutes. I do read some (maybe 20%) of the news seeking alpha sends me, and I may or may not read an article or two from other sources once in a while.

That being said, I find that around 30 stocks is a good amount. It's not a precise number, I can't even recall how many I have now, but somewhere in that ballpark is where I feel like I can comfortably follow all of the stocks I own.

[ChadR]

I'm a buy and forget investor. As evidenced by my 61 different stocks that I own ( I actually had to go count because I had no idea how many I had, just knew that I wasn't up to triple digits yet). I'm sure by the time I hit retirement and start living off of my dividends, I will have over 100 different stocks. I came to realize that I spent too much time stressing over sells and most of the time, I was better off by not selling the stock. Once I buy a stock, I don't look at their quarterly reports unless I am looking at them as a candidate to make an additional purchase of them. Is this the best route for everyone? No, but it is the best route for me.

Could I have a larger portfolio value if I had only invested in 10-12 stocks? Maybe, but I know that I would be under a lot more stress at night worrying about it, and I don't want to lose anymore sleep than I have to. And I plan on living off of the dividends and not my net worth so I'm not too worried about portfolio value.

Good article by Chuck Carnavale.

[fenders53]

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.

[Otter]

(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.

[fenders53]

(08-28-2019, 05:30 PM)Otter Wrote:

(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.

I enjoy beating myself up so stop trying to wreck my fun.  And thanks for bringing CSCO up as a good example.  I got a smoking good deal on some $60+ CSCO shares over 20 years ago.       

Seriously though you are right.

[Otter]

Haha. No worries, fenders, wouldn't want to detract from the fun.

To answer the thread's original question in an unhelpful manner, my answer is "however many stocks there are in my portfolio that appeared to be a decent value when I purchased them." At the moment, that's 90.

[fenders53]

Watched Cramer last night. He says ten stocks is about right, which I already stated is not even close to enough to avoid taking a severe beating if you select just a couple wrong stocks. I suppose it would likely work fine if you put yourself there after a significant recession. It seems like a reckless strategy if you did that today. I'm certain the "stock collectors" on this forum would never approve.

[NilesMike]

For me, 15-20 is optimal. It keeps me searching for that next great stock. Also, while diversifying mitigates the risk it also mitigates the upside, which is bad IMO.
I prefer to mitigate the risk by buying quality at discounted prices. Foolproof? No but it's the best I've got.

Good luck to all.

[fenders53]

(08-30-2019, 06:38 AM)NilesMike Wrote: For me, 15-20 is optimal. It keeps me searching for that next great stock. Also, while diversifying mitigates the risk it also mitigates the upside, which is bad IMO.
I prefer to mitigate the risk by buying quality at discounted prices. Foolproof? No but it's the best I've got.

Good luck to all.

I think that's my target in the end but it will take a recession to get me back there.  We can debate it until the cows come home of course with no resolution.  I'm just trying to beat the S&P by a few points and I don't think I can with 50 stocks.  My bet is always hedged with a lot of SPX on the side so it's hard to win or lose by much in any event.

[rayray]

I guess the answer is: Whatever amount you feel comfortable owning.

I might be wrong but I'm fairly certain Charlie Munger said one only needs to hold up to three stocks lol...I vaguely remember him saying that at one of the shareholder meetings I attended. I do know that WB said diversification is for people who don't know what they're doing--he also said diversification keeps one safe while concentration will make one extremely wealthy--MAN--with either advice one better not make ANY mistakes. WB also said buy an Index fund and forget it.

[fenders53]

(09-11-2019, 07:53 AM)rayray Wrote: I guess the answer is: Whatever amount you feel comfortable owning.

I might be wrong but I'm fairly certain Charlie Munger said one only needs to hold up to three stocks lol...I vaguely remember him saying that at one of the shareholder meetings I attended. I do know that WB said diversification is for people who don't know what they're doing--he also said diversification keeps one safe while concentration will make one extremely wealthy--MAN--with either advice one better not make ANY mistakes. WB also said buy an Index fund and forget it.

As much as I respect them both, holding all your wealth in three stocks is absolutely reckless advice neither of them has actually followed for 50 years, if they ever did.  Advice given by the same guys that brought you KHC.  They say a lot of things for shock value these days, especially Charlie.  They contradict themselves, but we are smart enough to sift through it on this forum.