Every investors always aims at building a strong portfolio. Going through the #hive feed, this post from @behiver caught my attention but same time raises a question in mind. The posts highlights the importance of diversified portfolio for an investors. Creating a strong portfolio is not an easy task. It requires a lot of research and analysis and in depth understanding of the market, be it stocks or crypto. We have some good fundamentally strong #altcoins and stable coins in #crypto but when it comes to #stocks picking, many people lose their path. Many times all the stocks looks lucrative and a normal investor ends up stock piling a number of stocks in their portfolio.
But what would be the optimal number of stocks that makes the portfolio looks better and manageable?
In begining of my investing days, i ended up piling up more than fifty (50) stocks in the portfolio. But as gained experience and started understanding the market movement, i trimmed it to Twenty+ (20+). The ideal number can vary from investors to investors. The number can be based on factors like investment goals, risk tolerance, and time horizon. Holding more than 30 stocks can make it difficult to track and manage the portfolio effectively.
In my opinion, there is no magic number that may define a stock portfolio, because it depends on our risk appetite and investing experience. If our goal is to protect capital, we don’t track the market daily, and we prefer stability, then holding 12 to 20 diversified stocks makes sense. It reduces risk if one stock underperforms.
But if someone who hunts for multibaggers or invests in small / midcaps, and is comfortable with short-term volatility — then even 6 to 12 focused stocks can work. But only if backed by strong research and conviction.
So what is ideal number ? Here I summing up the numbers in my perspective :
Beginners or low-risk investors: 12–18 stocks
Moderate risk takers: 10–15 stocks
High-risk, high-conviction investors: 6–12 stocks
It should be noted that, the better our stock picking skills, the fewer stocks we need in our portfolio.
What you think of the optimal number of stocks one should hold in their portfolio?
In good faith - Peace!!
