Concentrated Portfolio (5-15 stocks) vs Diversified Portfolio (15+ stocks).
Which one is suitable for you?
A detailed thread
(1/15)
@contrarianEPS
Concentrated portfolio
“The way to become rich is to put all your eggs in one basket and then watch that basket”-Andrew Carnegie
Here one keeps less than 15 stocks or even less than 10 stocks. So, your position in each holding is high (maybe even in double digit for few)
(2/15)
So, when you are right about your business, you make a killing even at portfolio level.
For example, Ten baggers on 1% position moves your total portfolio by only 9% whereas the same Ten bagger on your 10% position would almost double your portfolio (90% return).
(3/15)
So, to create wealth, concentration is the only way.
If we look Forbes Billionaire list (Jeff Bezos, Elon Mask, Bill Gates etc), most of them have reached the top by holding only one stock (Amazon, Tesla, Microsoft etc) which has appreciated multiple times over time.
(4/15)
Diversified Portfolio:
“Don't put all your eggs in one basket”
Here One keeps 15+ stocks and in some cases in may go to 40-50 also (will be discussed later).
The advantage is you lose less in portfolio level when you are wrong.
(5/15)
