On 8/28/00 I decided after being 100 % invested in QCOM with 27 shares to sell and diversify into other G&K stocks and some Next Generation stocks
I don't want to monday morning quarterback either, but you might want to take a long, hard look at your diversification strategy.
We all know that diversification has some nice benefits--especially risk reduction. It has a couple of major drawbacks, though. There is, first of all, the difficulty of following a large number of stocks. With your portfolio of 9, this may still be doable.
But there's also the matter of increased commissions. When you have an extremely large portfolio, say 100K, the commissions involved in buying ten stocks aren't very significant. But when you're talking about selling $2000 worth of Q, and diversifying into 8 other stocks, that's about $200 in commissions right off the bat, for an instant 10% loss. Furthermore, whenever you put more capital in, you have to spread it out across these stocks if you want to maintain the portfolio's balance--for a cost of $200 per.
I have a portfolio of similar size to you, which is why I'm thus far keeping it in only two stocks. I plan to diversify, but only as I put more capital in. E.g. when I save up a thousand or so, I'll put it in, and buy one stock (probably one I don't own yet). This really cuts down on the commissions, which will kill you in the end. |
