ot: Only 63 positions? What a piker -g-.
Well, I will be the outlier here - lol
I always say an investor ought to be able to follow maybe 7000 stocks... because 6000 or more of them can be dismissed in a heartbeat as unsuitable for purchase at the price.
I hold more than 200 positions. Some positions are relatively large; some are quite small.
You put the stocks up by sector on a screen and its not such a big deal to follow them.
My side of why I disagree with "pig at trough" investing (which is: the portfolio (trough) holds 30 stocks say, and then get a new idea (pig)that's hungry, so one of the 30's got to be sold (pushed aside) to make room for the new one.):
First, best ideas don't turn into best investments. Second, you got to be right twice -- on the buy and the sell-- if the new idea is going to perform better than the stock deselected. For an INVESTOR, sometimes a stock takes longer to work out than expected. That is okay (for an INVESTOR). Third, concentration is a concept sold by mutual funds - "You pay for our good ideas, strong research, our in-depth look at management, suppliers, customers, which we couldn't do if we had so many different stocks." Well my opinion is these guys are not as right as often as they imply. They still have lots of turnover (e.g. Torray fund) and clunker picks. Fourth, what's the matter with these people who only get a few good ideas? Why don't they get more? People are buying all kinds of stocks every day because they see good investment opportunities. Fifth, it is generally accepted that diversification reduces risk - which I agree with but disagree on the number most analysts say is necessary and sufficient. (Their recommended numbers are too low). It is also presumed that "too much" diversification will lower returns. That is not proven.
--------
COS.UN being half your net worth is "a bit too risky" only depending on how much your net worth is, what your goals are for increasing that worth, and how much you KNOW about COS and how much you don't know about alternative investments.
To me, at some point in the recent past the stocks in this "Canadian Oil Sands" sector appeared to be - if not a reasonable investment - at least a decent bet. For me, since my ability to analyze the details of any particular company in this sector is very limited, I'm not able to pick the best stock. So for me, I have eased into several positions. I started with SU added to it, started COSWF added to it, recently added Shell and Husky. Maybe COS.UN will turn out to have been the best bet, - I'll only know in retrospect. Meanwhile I'm willing to bet that being in is good and getting average sector performance will be good enough. At least better than being out or accepting the business risk of owning only one stock. (I am hoping of course for continued good performance from all the companies and their stocks.)
Since I repeat this tactic with other sectors and I prefer ltb&h, you can see how I can arrive at holding a large number of positions.
--------
There are traders who say they can only follow a few stocks at any given time. I get the feeling though that when pressed, some of these people will offer, "I trade in my trading account" or "I only trade with a portion of my funds". I am left to guess that there are plenty of these people who therefore might have a substantial amount of non-trading dollars, if not a majority amount, and that these monies might be tied to one or more index funds. So in terms of number of stocks owned, maybe it's actually me who's the piker. -g-. |
