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How Many Stocks Should You Own?
By The Good Investors  •  October 30, 2020
One of the age-old questions in investing is how widely should we diversify. Unfortunately, it seems that even the best investors can’t seem to agree on this. Legendary investor Charlie Munger is famous for being a supporter of a concentrated portfolio. He once said:
“The idea of excessive diversification is madness. Wide diversification, which necessarily includes investment in mediocre businesses, only guarantees ordinary results.”
In 2017, Munger said that he owned just three positions in his personal portfolio – Berkshire Hathaway, Costco, and an investment in Li Lu’s investment partnership (which itself is highly concentrated). At the opposite corner, we have other renowned investors who practised wide diversification and yet still achieved stunning results. For example, there’s Peter Lynch, who earned a 29.2% annualised return in his 13-year tenure managing the Fidelity Magellan Fund from 1977 to 1990. In his later years managing the fund, Lynch held as many as 1,400 stocks in the portfolio....
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By The Good Investors
We are Chong Ser Jing and Jeremy Chia, and we started The Good Investors in the aftermath of The Motley Fool Singapore’s closure in late 2019. We both have a passion for stock market investing and believe deeply in enriching society through our investing activities. One way we can do so is through investor-education. The Good Investors is our personal investing blog and will serve as a free platform for both of us to openly share our investing thoughts with you.
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