How many stocks should an invidual investor hold?

T E: How many stocks should an invidual investor hold?
Should it be JUST one or five stocks, or stock indices, instead of 20 stocks or international indices?

That is, put everything in one basket, and watch that basket?

Answers and Views:

Answer by Hertha
You should own more than one stock basically because you own Microsoft, but it went down since Apple went up. So it would be wise to own Microsoft and Apple. You should not buy stock indices. Ex Dow Jones is based on large American companies, so if large American companies goes down, so will the indice. You probable would buy mutual funds unless you have fund manager capabilities and can pick your own stock to load a portfolio.

Answer by EndlessMountain
NONE unless you know what you are doing. Stock trading is like playing poker. IT IS A FORM OF GAMBLING. So many people have been losing money during this economic and dollar collapse right now.

Also everyones portfolio is different. If you do not have much money and you are forced to gamble in life then you may have to put your eggs in one basket. The basket I like is the JUNE 10.00 PUT of XLF.

My friend also told me about code EVEP also. I would wait for the SPY to retrace about 50% on fibonacci before getting in.

Note – If you do not know what fibonacci is, then you should not be gambling at the stock market casino

Answer by Ryan
Never put all your money into one stock…MAYBE one mutual fund if it is well diversified within itself. It depends on how much money you have, but 5-10 stocks if you have about $ 10k to invest.

Answer by Thor
Most advice says the individual investor can only watch about 10 to 20 stocks at a time. No problem with having both stocks and index funds. So it can be a combination but 20 is almost too high.

Ten stocks can cover most sectors and types of stocks for the average person. So more than that and you start to get more duplication, then one stock will be better than the other. So then why own it? You should sell the weaker one and buy more of the stronger in the same industry. Thus fewer stocks.

Cramer says 10 and focuses on mainly 5. Says you should spend an hour a week checking up on and reading about each stock. So more stocks require more time.

I have about half mutual funds and half in stocks. But I spend a lot of time on my stocks.

Good Luck.

Answer by gosh137
Nowadays, (even the old “widows and orphan”) stocks should not be buy, hold and forget about but buy and keep track of them. You should not have so many that you can’t spend at least one hour per week per stock doing research on them.

Answer by muncie birder
That is an interesting question. When you hold just one stock or even just 5 stocks you are very subject to specific risk. Anything can and does happen. With a portfolio of 20 stocks there is only a 5% specific risk maybe less. On the other hand by owning 20 stocks the probability of getting a really large capital gain is minimized.

Most investment professionals will advise you that you should own at least 10 different individual equities in not similar industries. See what happened to all the banks or for that matter all the insurance companies. An absolute blood bath.

Answer by nanny
Have at least 5 and no more than 10. If you want to diversify into sectors ETFs or closed end funds are very useful.

It is nice to just put a percentage of your investment $ in each stock or fund, then when they are out of balance just re-balance your portfolio. This technique keeps you selling high and buying low, without mutual fund expenses.