Stumbled across this thread and would love it if this was an ongoing discussion. Portfolio construction and investment philosophy is an ever changing landscape and I get the impression that many of you have tweaked your style with experience. Just a shame the topic is buried under the "General" header.
@travelightor@MarsC@hankreardon@Transversaland anyone else who is interested:
I gather from the repiles in this thread that most undertake fundamental analysis as an individual on their private account. If so, in terms of your investing philosophy, what is the maximum number of companies you are willing to hold in your portfolio? What forms the basis of your limit:
- Lack of time or competence restricting coverage of industries/companies/competitors?
- A view on performance v portfolio size?
- something else?
I'm not really angling at the risk/diversity argument here. You may well have a very good case for holding just one company as I have before. I am really interested in what sets the maximum.
My observation is that rarely would a full time professional analyst cover more than 20 companies (usually from one or two sectors) and of course they are not trying to construct a portfolio. As individual investors do we limit the potential performance of the portfolio if we exeed a certain number of components?
Also, is there anything useful you've learnt in the last 6 months that you think builds your armoury? I have altered my philosophy on dollar cost averaging. I used pre-determined price entry points (based on fundamentals) for each target company and was agressive earlier in the crash cycle (pre-bottom). My estimate is that I have ended up with significantly more capital invested (and probably at a better average price, despite being "early") than if I had waited for a bottom to become obvious. I have recognised that my blind spot is that I tend to be a back foot buyer (probably a natural disposition for a value investor). This means I have difficulty chasing the market upwards and tend to turn off all together when it is rapidly ascending. By being earlier in the down leg I have captured the upside with a bigger investment I believe.
Hope we can kick this thread along a bit..
