Why I hold 3 stocks only?

Some people with a 30k portfolio might put 3k each into 10 positions for diversification purpose

For me, my portfolio is a mid 6 figure and i often put 100k-200k into a single position, I believe in focus investing

I can only come out with 2-3 great ideas a year and I often put a significant net worth into each of them, if you yourself are convinced that its a great super amazing idea then why put peanut sums?

I could put my money into 10 different stocks and if I had to estimate their future returns and rank them, then my portfolio may look like this

Counter A - Returns 20%
Counter B - Returns 15%
Counter C - Returns 15%
Counter D - Returns 12%
Counter E - Returns 12%
Counter F - Returns 12%
Counter G - Returns 10%
Counter H - Returns 10%
Counter I - Returns 8%
Counter J - Returns 8%

I would ask myself, why the hell am I putting my money into Counter I and Counter J? why diversify into lesser ideas just for the sake of playing it safe? A lot of new and even seasoned investors fall into this trap

if you want to really diversify, just purchase the S&P 500 ETF and the STI 30 ETF and get your long term market returns of 8% to 10%, its just really simple

if you choose to be a stock picker and would want to eventually make a career or living out of it, you have to outperform the index by a wide margin... and to do so you place your bets on your best ideas!

so I would rather put my money evenly into Counter A, B and C! like how i put my money in hrnet, propnex, F&N!

In the past I had a wider portfolio holding 3 banks 5 reits and some other blue chips, it felt so safe.. but the returns were not much better than the STI ETF...

So I when back to my roots, back to focused value investing and aim towards 12% to 15% long term returns

Back when I started, I remembered my portfolio having a value of 25k only.. I bought 2 stocks
Challenger 150,000 shares at 10 cents for 15k
Starhub 5,000 shares at 2 dollars for 10k

One became a 5 bagger another 2 bagger... these were not even my best ideas! but it worked very well because I focused fire and the portfolio returns were amazing!

So now its back to basic!

Put all eggs in a few baskets and watch them closely ^_^

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39 likes
8 comments
investforlife

but the unrealized loss also will be greatly magnified and volatility. so how do u control ur emotions ?

ThinkForwardInvestor

I have nothing against focus investing but just want to share the thinking from the diversification camp.

1. A/B/C might make >100%? But the thing is which are A/B/C?

2. A/B/C return -20%?

So to do focus investing, one must really know the companies very well to reduce the risk of the unknown.

grandslam

Best A/B/C might be the worst A/B/C in realty. Even professions can make quite some mistakes...Concentrate or diversify each has its own advantages and disadvantages

jerrie

Diversification is more for big players imho

ljunyuan

Thanks for the share bro, and all the best in your investments... Huat ah! 😊

mindgamesone

Reply to @DareDevil : My friend.haha
I like to put all the money in one or two basket and watch them closely=P

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