Question: why do some people own 25 stocks and so on? Wouldn’t it more logical to own less and increase your pecentages ? Ex : 5% of 4000 vs 5% of 1000 x 4 .
Ville Kemppinen: This had something to do with risk. Can’t remember exactly. Maybe something that you kind of diversify your risk over several stocks should make kind of sense? But it might have all been bollocks… So many people say its a good thing.
Avi Tanny: Of course I mean diversification makes sense but it should have limits
Gabriel Nadeau: It has, the 20th stock is the point at which you stop getting any meaningful marginal gain of risk diminution.Also, statistically speaking, the standard deviation of dersified stocks is smaller than when you have only a few
Bob Stag: Gabriel Nadeau , to a point I agree, but some of us take chances on turn around companies, and higher risk/reward companies. If the turn around doesn’t work, or the high risk/higher reward tanks, I’d rather have another 27 – 30 stocks to absorb the loss.
Avi Tanny: James bonds
Tim Curnock: Bondages
Tim Curnock: Bond ages
Tim Curnock: And buy bandages too. Safety first.
Stephen Wallace: Diversity. I own over 60
Avi Tanny: Has it worked well for you
Stephen Wallace: Yes, have lost on few but most make money.
Doug Williams: How do you find time to keep up with that many?
Stephen Wallace: Only work half the year
Wade Yandell: I do it to protect my div stream. If one of my holdings completely halted their div, I’d likely be ok because of the other companies. If I had 8 holdings and one does away with the dividend, I’m in much more trouble.
Benjamin Stroup: Exactly. Great point, Wade Yandell
Dan Behm: Whys it matter! Do what makes you feel comfortable within the market. There’s no right or wrong is there??? If what your doing outpaces the markets in general…For myself I own 64 co’s in total within my portfolio, I’ve spread myself out over several sectors, with no one company more than 5% of my portfolio, I do however overweight in sectors with Tech and healthcare and defense my heaviest overweight currently! It’s my own hand picked Mutual fund which I have control
Chuck Parrish Jr: I only own 16Quality over quantity
Sig Landoe: the other day I heard the top 5 stocks were apple, Google, Facebook and two others. When they drop they will go down hard. When the stock market drops, so will the dividends
Dan Behm: Sig, there the first to move right back up as well coming out of any correction, the companies you mentioned only AAPL pays a dividend and that will likely remain the same even if the stock drops 50% that’s the beauty of a good Div portfolio, they help shelter a DGI investor preserve income within his portfolio even if the portfolio value overall were to drop
Wade Yandell: Absolutely incorrect. Check the div history of quality companies. If they can pay (and raise) divs through the 2008 Great Recession, they’ll be ok in a correction or even a Bear market.
Greg Williamson: Wade that is true in most case but not all. There are some energy companies that made it through the great recession but had to cut their dividend afterwards during the energy collapse.
Andy Pickett: Diversification. If something tanks or cuts dividend you don’t get hit hard. Slow and steady.
Joe Stocks: If you own 1 stock and it tanks you lose more of your money. Have just 1 is fine with a smaller account but not so much with a large one.
Avi Tanny: I understand that but I meant the difference between owning 25 and 8. I own 7 and won’t go more diverse then that
Nick Lee: Avi Tanny having 25 allows you to have at least 2-3 companies within a given sector. Having 7 only gets you 1-2 companies per sector? Within your 7 company portfolio, say you only have one financial company versus 3 financial companies in a 25 company …See more
Avi Tanny: Thank you for your feedback . I still think that unless I have a lot of money owning that many is too.much . Please understand this is a personal view and I’m not arguing other peoples strategy
Nick Lee: Fair enough. You don’t need a lot of diversification if you only have a few thousand dollars. Many people in this FB group, I’m sure, have portfolios over $50,000 and so prefer to have some diversification.
Avi Tanny: Love that about this group . There’s quite the range.
Andy Pickett: I think it depends on account value. If you have a 100k account and u only have 8, that’s 12k in each. If it drops 10% on bad news you looking at a nice loss. Even 16 would be half the loss.
Brian Fey: I think gains come out the same either way. And owning more different stocks makes the account more diversified, therefore a safer investment.
Greg Williamson: I think the more the better, as long as you stay diversified and are willing to take the time to keep up with them. I own over 200, and counting!
Benjamin Stroup: Bingo. I am over 130 … hope to get to 200 eventually. I like the diversification, and the more you own, the more consistent the passive income stream created by the dividends.
Bob Stag: Me, I at I think 28, but always on the lookout. Don’t like any of them to get over 8% of the portfolio, but have most of the sectors covered (except utilities) but comfortable with where they sit. Riskier plays (like MAT and FTR, keep around 1 1/2% – 2% each), the rest I feel are strong companies that I don’t have to worry about, like BUD, AAPL, KO, INTC, amd ,ore, won’t go into the whole list.
Greg Williamson: I do something similar Bob. I try not to exceed 5% with any one holding. I have so many because I personally prefer to pick multiple stocks out of a particular group instead on narrowing it to one. Take healthcare for example. I could choose between Pf…See more
Michael Morse: Opportunity. If you see it…you buy it….trim down as the price goes higher….then churn that money into new opportunities. You can’t buy new opportunities if your always 100% invested.
Dan Behm: Im always 100% invested, I want cash for an opportunity Ill pull it from an investment thats outpaced my expectations to fill a contrarian need or perceived gift from the markets.
Andy Pickett: I agree with Daniel. Why have cash sitting in there doing nothing. Even 1% is better the. Nothing.
Michael Morse: You only think so til you need the money to buy an opportunity (like a big dip in something with value that got hit by some other news or an exchange glitch).
Michael Morse: Cash is for winners, which is why Buffett is sitting on millions in cash.
Steve Silva: Work and make more money to invest.
Bob Stag: Right now, with decisions I have made, sitting with 6% cash. Friday I will add more and get back to 12% – 15% cash.
Ray James: This is a quality/quantity question. some aggressive types would say “put all of your eggs in one basket and WATCH THAT BASKET.” You see, concentration can make you rich, if you are right. The other side of that coin is that there were lots of people who put everything in Enron, for example, and thought they were smart. And they were for a time. Some got out and are ok, some are mowing lawns today to make ends meet in their retirement.Never marry a stock.
Jimmy Doan: Say you have 1 billion dollars in assets and you own 5 stocks. Can you stomach to lose 200 million dollars in one stock?
Giovanni Nestarov: Greg Williamson Two comments:1. At some point, you wind up with “diworsification” (not a real word, but a neologism I’ve seen used) whereby you wind up essentially just tracking market indices. In other words, you’re removing any benefit you might otherwise be getting through stock picking. You also make it more difficult to monitor your holdings for whatever you might do that’s consistent with your strategy.2. Having a lot of positions is a huge pain in the ass and a psychological hindrance in the event we get into a prolonged downturn or you otherwise would consider selling with your strategy. If you are absolutely certain you’re never going to sell, this doesn’t matter, but if you are not, deciding when and how to liquidate 40 (or 190, as someone said) positions, or some portion thereof, can be tough, and you’re paying commissions to do so.As for my personal take, I don’t believe in heavy concentration, since some unexpected bad news can kill you, but I don’t think some kind of ridiculous portfolio with, e.g., 200 positions makes sense either. I would keep my portfolio at around 30 names or so if possible.
Jimmy Doan: Study showed there is no right or wrong answer of how many stocks you should own.
Ray James: Diworsification is a Peter Lynch word, And studies show that studies are loads of garbage…look it up!
Giovanni Nestarov: What study? That’s a little too simplistic for my taste, in any case … I’d want to know what the parameters were, what time frame, why that should be instructive going forward, how the study did out of sample, whether the data was curve-fit, and all that other stuff.
Giovanni Nestarov: Ray James Cool, thanks! I thought it was just made up (by less of a luminary).
Jimmy Doan: Giovanni Nestarov the Enron report. you should read it.
Ray James: Diworsification simply means “too much diversification”…it IS a thing. anything over 12-24 stocks (depending on the crappy study–funded by Wall Street firms that want you to pay them to run your money) and you loose the benefit of diversification and you might as well just buy an index fund or ETF
Greg Williamson: If you are a real buy and holder, as I am, that means you do not sell a stock unless there is a specific reason. Also, there are so many good stocks out there that you may miss out on by limiting yourself to a finite number. Also, I am not just blindly…See more
Jimmy Doan: ????????
Ray James: Greg Williamson hoarding used stocks is a thing.
Noshee Khan: I keep 7 in my portfolio and I rotate them.
Chris Bassett: It makes sense to own as many as you can track and manage. Some people have more time than others.
David Lyon: Harder to stay on top of several stocks, how do you remember which did what?
Michael Morse: Write it down…your exit target.
Nandy Colon: I currently own 86 and don’t mind and also find time to see how they are doing. Is how you feel confortable but I agree with most here mainly for diversification.
Michael Morse: The most i ever had was 32. After i quit my job, i’ve trimmed down to 12. Been siphoning off funds to live off of.
Jimmy Doan: Nandy How is it working out for you personally?
Nandy Colon: Jimmy Doan honestly I spend about 3-4 hours reading a day. Also have a full time job work 50-60 hours a week and read a financial book before I go to bed for about 30 minutes to an hour a day. As you can see is a lot but for me it has being one of th…See more
Jas Mca: It all depends on your personal comfort for risk on how many stocks you want to hold and the time you have to pay attention to them. I don’t chase the big FANG ( I do have holdings in them) But my future forward portfolio is a 38 stock portfolio of high quality, proven, dividend paying (mostly aristocrats) that I have adopted a Buy and Hold philosophy for future dividend incomes. I trust in these solid bedrock dividend companies enough that I can set it and forget for those 38 stocks for the most part.
David Nieto: Well there are a lot of dogma’s out there: “diversification is good but not too much” “I can’t follow more than…x stocks”, etc. The question is, is this really so!?? I have a different approach focused mainly on risk. Each entry in my portfolio is 0,5% of the total portfolio. In fact I have created a High yield equal weight ETF myself and I don’t care at all about the amount of stocks in this “etf”. The questions that matter to me: “is the company to survive”, is the dividend to hold/increase and is the stock price keeping up. I use also software to monitor my investments, that cost me 15 minutes a day!! My portfolio generates ca. 7% a year on dividends. 2016 was top with a total of 18,9% profit. This year is (as European investor) break-even due to the euro/Dollar changes. My “etf” consist actually of 236 different stocks!!!!
Michael O’Ceallach: One word: diversification
Jimmy Doan: ☝️☝️☝️☝️
Mike Grega: Diversity
Daniel Elijah: it doesnt matter. the stock market blows. i invested in about 2000+ stocks and bonds via mutual funds and the more diversification you have actually takes away profit because 1000 stocks can go up in one day while the other 1000 break even or fall and it all evens out to a waste of time.
Avi Tanny: Wowzer
Daniel Elijah: for real huh.
Daniel Elijah: it would be better to go all in on one stock that you feel will rise for some reason or another, you will make 100x more profit then screwing around with a “diversified” portfolio.
Avi Tanny: For security I’d go less wouldn’t want to lose all my money
Daniel Elijah: rgr ticker, search it, look back a week ago….. 48 to 51 per share currently…. knew this shit was happening…. 20k / 48 per share = 416.666 shares x a current 51 per share = 21250 or 1250$ in profit in one week….. compared to my +260$ in my diversified piece of sht portfolio over the last 10 months.
Daniel Elijah: just being realistic.
Avi Tanny: I did well 16% in the last year on about 7 stocks
Daniel Elijah: im up 1 % wooOOoOoOOo who caaares
Avi Tanny: Well look at your strategies ..see what isn’t working. Rgr worked
Daniel Elijah: ive tested this theory with theoretical trading and its damn true. i would have made more dumping 20grand in ruger a couple weeks ago then my diversified pos portfolio has gaine din one year.
Michael Morse: What if portfolio….lol. what if you bought $20G’s worth of fannie when it was only 25 cents?
Michael Morse: I did….well…i bought $2G’s worth.
Michael O’Ceallach: There are two kinds of players in the market: gamblers (traders) and investors. Investors buy a piece of a well run company with a wide moat and strong future earnings growth. They look long term. Gamblers gamble and try to beat the market and statistically usually lose.
Michael O’Ceallach: If you are a fan of Ben Graham, you get this.
Michael Morse: I only bought it back then because the media was pumping fear but their iou balance sheets showed oh somewhere around $600billion institutions owed them money…but that was before the government stepped in and scrood the shareholders.
Greg Williamson: As I mentioned in a previous post I have over 200 positions. Here is a partial description of why: I have so many because I typically personally prefer to own multiple stocks out of a particular group instead on narrowing it to one. Take healthcare for example. I could choose between Pfizer, Johnson & Johnson, Abbvie, Abbott Labs, Novo Nordisk, Ely Lilly, Amgen, Gilead, Astrazeneca, Novartis, Medtronic, Stryker, Becton Dickinson, Intuitive Surgical, Celgene, UNH, etc. These are all great companies and yes I could narrow them down to one or two, but I prefer to let them all ride, reinvest the dividends (some do not pay them), and add to them at attractive levels.
Avi Tanny: Etfs maybe better in that case? I mean if you’re buying baskets?
Greg Williamson: I know what you are thinking. Why not just buy a healthcare based etf. The reason is that with the etf you are buying the bad along with the good and you are not taking advantage of the best opportunities. Also, with my method you can track a group of …See more
Michael Morse: Etf’s aren’t better. You’ll make more in divy’s owning the actual stocks than you would owning an etf.
Nandy Colon: Greg Williamson must be sitting on nice capital gains! I also added those stocks at those prices ?
Greg Williamson: Correct Nandy, out of the ones I mentioned I am up in almost nicely on almost all of them, especially factoring in years of dividend reinvestments.
Greg Williamson: Avi Tanny, I am not just buying baskets. It took 16 years to build the portfolio and it is still a work in progress. It is a well thought out, hand crafted portfolio. At least that is the hope!