How many stocks belong in your long-term portfolio?

  Date Thursday, July 17th, 2008

Seven.  Having this many stocks, spread out among different sectors, is the perfect number to have on your long term side.  This allows you to benefit from growth in each of the major sectors, and still be able to track them weekly.  Many investors think that they have to have several stocks to be diversified, but this redundancy among several sectors only serves to hurt their positions because no one can devote the time needed to maintain thirty or more hours a week.  By being able to track your stocks, since there are only seven to watch, you can focus on the best in each sector.  Another point is that after a certain number of stocks, you reach a point of depreciating returns due to the fact that they all will not be top performers in their sector.  This will take away from the seven that you have as the solid gainers.  Being properly diversified across sectors is far better then being diversified within the same sector.

3 Responses to “How many stocks belong in your long-term portfolio?”

  1. THOMAS Says:
    April 22nd, 2010 at 2:51 pm

    Thank you for this article. It was very informative.

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