Veteran investor Ashish Kacholia, one of India’s most respected stock pickers, has made a surprising admission about his own investment portfolio. Despite holding stakes in nearly 55 listed companies, Kacholia says he believes his portfolio has become “massively and foolishly over-diversified” and continues to advocate a concentrated investment approach for most investors.
His comments came during a recent interaction with followers on X (formerly Twitter), where he reiterated that conviction and position sizing matter far more than simply owning a large number of stocks.
Concentration Over Diversification
Responding to an investor who sought advice on constructing a ₹20 lakh equity portfolio, Kacholia suggested that investors should resist the temptation to spread their money too thinly.
The investor presented three possible approaches:
- 5 stocks with ₹4 lakh invested in each
- 10 stocks with ₹2 lakh invested in each
- 20 stocks with ₹1 lakh invested in each
Kacholia’s answer was unambiguous. Subject to the usual investment disclaimers, he favoured the first option—a concentrated portfolio of just five stocks, with roughly ₹4 lakh allocated to each holding.
The advice reflects his long-held belief that meaningful wealth creation comes from backing a handful of businesses in which an investor has high conviction rather than owning dozens of companies with insignificant allocations.
A Candid Admission About His Own Portfolio
In another conversation on X, Kacholia was asked how he approached position sizing during the early years of his investing career and whether he remained highly concentrated in his best ideas.
His response was remarkably candid.
“Early on highly concentrated, now massively and foolishly over diversified,” he wrote.
The statement caught the attention of market participants because Kacholia himself currently owns stakes in around 55 listed companies through his disclosed portfolio.
While many investors assume that successful market veterans intentionally diversify across dozens of stocks, Kacholia’s comments suggest that his current portfolio may be more a consequence of managing a much larger pool of capital than an ideal investment strategy.
Why Position Sizing Matters
Kacholia’s views are consistent with one of the most important principles followed by legendary global investors—that position sizing can have a greater impact on long-term returns than simply identifying winning stocks.
Several renowned investors have argued that exceptional investment performance comes not only from finding good businesses but also from allocating sufficient capital to the highest-conviction ideas.
A portfolio with too many stocks can dilute returns because even if a few companies perform exceptionally well, their contribution to the overall portfolio remains limited.
Conversely, a concentrated portfolio allows successful ideas to meaningfully influence overall performance, although it also requires greater research, discipline and the ability to tolerate higher volatility.
Diversification Has Its Limits
Financial advisers often recommend diversification to reduce company-specific risk, particularly for beginners. However, over-diversification can become counterproductive.
Owning 30, 40 or 50 stocks may reduce the impact of any single mistake, but it can also make it difficult to outperform the broader market. As the number of holdings increases, investors often end up resembling an index fund while still bearing the effort of researching individual companies.
Kacholia’s remarks reinforce the view that diversification should protect investors from catastrophic losses—not dilute every potential winner.
Not a One-Size-Fits-All Strategy
Kacholia’s advice should also be viewed in context. His recommendation of five stocks for a ₹20 lakh portfolio is meant for investors who have done substantial research and possess strong conviction in their stock selection.
Concentrated investing is not suitable for everyone. Investors who lack the time, expertise or temperament to analyse businesses in depth may be better served through diversified mutual funds or broader portfolios.
Nevertheless, Kacholia’s candid acknowledgement that his own portfolio has become excessively diversified serves as an important reminder that successful investing is not about owning the maximum number of stocks. It is about allocating capital intelligently to the opportunities where conviction is highest.
For retail investors, the message is clear: instead of chasing dozens of ideas, it may be more rewarding to thoroughly understand a handful of quality businesses and allow those investments the opportunity to create meaningful long-term wealth.
