Juster - LOL, I think you know I was just having fun but I thought I would reinforce this, since it's hard to tell online. I will say that the discussion reinforces the real truth, which is, there is no answer to your question from the data given. If you have extreme confidence in the stability of a single stock, you can hold more safely. My mother has a large pf and has over 50% of it in SunTrust, but I am confident that it will continue to increase earnings, for sure until interest rates and/or inflation begin to rise. Or if your investment represents a small amount compared to your salary, you can risk it all on a single high-risk stock, because the loss won't devastate you financially.
I own a lot of stocks because I tend to invest in riskier issues but have a lot of confidence in my overall judgment. So I want to spread the risk, since I feel confident that my picks have been good and don't want to be heavily blindsided by unknown factors. I have a 20% rule for maximum exposure in one issue, and break it frequently! But I usually carry 25-30 issues, although right now about 20% of mine is in BLUD. If I held more stable issues, I'd keep the number smaller. Also, if you spend a lot of time and get to know them really really well overa number of years, you can put more into them. This is how Warren Buffett gets away with it -- he knows EVERYTHING about the stocks he invests in, and generally only buys stocks that have good revenue history (unless he's going to turn them around himself, i.e. Berkshire Hathaway). |
