How Many Stocks Should You Own ?

[c kenneths]

I always wonder what is the optimum number of stocks an individual investor should own.

Somebody once told me that stocks are like women, the more wives you marry, the less time you have for the rest. I know people who own hundered plus companies, they comfort themselves with the fact that they will be very busy picking up and reading annual reports from their mail boxes weekly. They will be favoured by the laws of diversification, they are mainaining a spread among the whole sectors.

Others invest all their millions in one or two companies, and religiously follow news on these companies all their days. And they will be favoured by the laws of compounding, think of the bonuses and fat dividend checks. But supposing one or two of them crashes, ha! the result is better imagined than experienced.

So what is your own magic number, or are you in group one or two above?

[paragon]

well, everyone has their investment ideaology.If you do you homework well, you can even put a million in one stock. At the beginning of the year, i spread N1 million among 5 stocks and i April ,recently, i put another N1 million in 2 stocks. The expected returns is what informs my allocation.

But one thing i know is this, do not overdiversify, so that you can focus on and monitor your invesment well.

[c kenneths]

Do you then advise us to own five stocks or only two ?