Selected excerpts from the Knowledgebase -6
I’ve decided to do a daily small excerpt from the Knowledgebase as sort of a thought for the day. In many cases they will have extra thoughts of mine, or small updates. I hope you’ll find them interesting.
Saul
Here’s the sixth:
You can’t really keep track of more than 25 or so stocks, and that’s an absolute outer limit. With fifty you can find yourself looking at a stock symbol in your portfolio and thinking to yourself, “What’s the name of that company again? What does it do? Why did I invest in it?” That means you have too many stocks.
I greatly prefer a smaller number of stocks, as they are easier to keep track of. You need to read all the quarterly reports, and the transcripts of all the quarterly conference calls, which gives you a busy earning season. They often say a lot more on the conference calls than in the earnings press release. Reading the transcripts works much better than listening to recordings as it takes a quarter of the time, and you can skip the forward-looking statements messages, etc. Look at investor presentations too. And get a news-feed from your broker on each of your stocks.
I really like it better when I have fewer, but high conviction stocks. I’m more comfortable, and I can probably make more percentage gain for my portfolio with 12 positions than with 24. Fewer are easier to follow, and the chances of finding 12 that will average 25% gain (if you can find them), is MUCH better than the chances of finding 24 that will average 25% gain, and HUGELY better than your chances of finding 100 that will average 25% gain.
But maybe you’ve already figured that out!
Saul
For Knowledgebase for this board,
please go to Post #17774, 17775 and 17776.
We had to post it in three parts this time.
A link to the Knowledgebase is also at the top of the Announcements column
on the right side of every page on this board
