Just to recap, these are the 4 major type of risks that we are susceptible to when we are investing:
- Systematic Risk
- Company/Industry Specific Risk
- Human Error
- Black Swan
Taking into account these risks, here is my personal guide on how many stocks one should hold:
- As many excellent stocks that one can find at a good price
- As many stocks as one is able to understand in depth and have the sufficient time to follow
- As many stocks as one can have without incurring too much transaction fee in the form of min brokerage fee (not applicable for standard chartered brokerage user)
- As many stocks as you can afford to suffer a total wipe-out in any of the stock.
- As little concentration in a similar industry unless you are being kept highly aware of the intimate details of the industry or you are very confident in it.
Rule no …