Is there an ideal portfolio size? If so, what are the principles that drive that decision?

Whenever I speak with active and successful investors I notice the portfolio size varies considerably.

The argument is always around diversifying risk.

But does holding too many stocks reduce portfolio performance? Is there a framework for managing this?

Can seniors in this forum help me with this long lasting doubt?

 

Dear Fun_Da_Mentalis ,

Main purpose of portfolio is Diversification of Risk
It is mainly risk management purpose ...
It is depend up on our research and analysis and full confidence on stocks

Generally Great Investors like " Warren Buffett " and " Rakesh Jhunjhunwala " portfolio is below 35 stocks approx .

Tight portfolio means below 35 stocks

huge diversification is reflecting our lack of confidence in our research ...
and it eat our profitability and in crash maintain more stocks is very difficult

In my view below 20 stocks is suitable to Low Risk and Moderate Risk investors ...

It is also comfortable to manage investors

ALL THE BEST

 

I am also of view that portfolio should vary between 10 to 20.It also shows your mastery as stock picker.I am also having 30 stocks but planning to reduce it by 20 in next 2 years ie to reduce 5 stocks each in next 2 years.I also think with 20 we can get full diversification and more than 20 stocks reduce performance.This happens when we keep on adding new good looking stocks even with less conviction and research but keep on carrying underperormers in hope of reversal.Habit of keeping less than 20 will automatically result into better selection of buys and early exit of deadwoods.May be when I retire to become a full time invester,I am able to reduce my portfolio between 10 to 15 stocks.

 

yes kharb ,

your decision is correct " keep on carrying under performers in hope of reversal "
and most of the investors i have seen in my friends they weekly add one stock in their portfolio
one of my friend always i add a good stock in my portfolio ...in his view all stocks are very attractive
he marry all socks and one day i saw his portfolio list it reached 90 stocks ,

i asked what you are doing ... he said all are good stocks ...
i said please tell your entire stock names with out seeing portfolio list ... at last he said only 30 stocks names in 90 stocks.... i said this is ridiculous ....
i said market now reached high valuations reduce your portfolio numbers
made 90 stocks to 20 stocks , he made his home work on that day and made a list of 65 stocks
he said this is the final list these 65 stocks are very good i will not leave those stocks...

i said are you marry these stocks ?
he loose most of the money in crash and now he is fully against to stock market ,
he always says that market is full of gambling and stock operators are robbed his money...

this is my friend practical experience ....

 

Much appreciated. Thank you, all. I like the 20 slot punch card example. I have had very concentrated portfolios but of late this conviction was wavering. Good to know that the direction is broadly right. This also forces depth of research, I guess.