number of stocks to have in ones portfolio

[billions]

i know some old rich men that have investments in more than 150 quoted companies in the nigerian stock exchange.

i recommend that 5-15 stocks is okay and that 60-80% of ones money shd be in just 5 of the stocks.

whats ur view.cheers.

[chokit]

"Owing stock is like having children- dont get involve more than you can handle.The part time stock keeper probably has time to follow 8-12 companies and buy and sell stocks as condition warrants.There dont have to be more than 5 stocks in the portfolio at any one time."This is no 8 goldenrule of PETER LYNCH from his book Beating the street,i think we may learn from this to decide how may companies we have the capacity to care for in our portfolio.
Personally i have 15 companies in my portfolio and only 4 of them are of great concern to me:

Transcorp ipo

Wema

Big treat

Dunlop

[DaInvestor]

well 4 me i was an advocate of just 3 or 4 initially due to lack of funds and cos i was new in the market the go for kill mentality. but over the years with oppourtunities coming up everyday u cannot limit urselfs to a fews stocks for now, but with the market correcting itself and a little bit of sanity returning to the market, the time has come for investors to become wise in making investments decisions.

i 4 one am planning to prunning down my profolio as i presently have like 15 different stocks, just waiting for them to hit my exit point and i say bye bye, some im waiting to get my money back due to loss, while others have not been listed immediately they get listed they get lost.

but like u said there are no rules but i think its dependednt on every individual to get a balance and see what works best 4 him

Note i have some for my children dat im accumulating regardless of good/ impressive results or not more like my savings as long as the company isnt making losses. Note na blue chip company and as long as they dont do a cadbury on me i guess im ok

[olusolakemmy]

it depends on the amount of time you have and access to information tools.
opportunities are everywhere, it becomes difficult to look away, by the time you want to participate in this and that, you evaluate your portfolio and discover that you already have 20coys!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

but there is no rules to it, it depend on individual, just that i have decided to change my tactics to concentrated portfolio, so that still goes along with the school of thaught that suggest 5-6 companies.

well, i hope i will be able to give you update on my new tactics

[billions]

Originally Posted by olusolakemmy

it depends on the amount of time you have and access to information tools.
opportunities are everywhere, it becomes difficult to look away, by the time you want to participate in this and that, you evaluate your portfolio and discover that you already have 20coys!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

but there is no rules to it, it depend on individual, just that i have decided to change my tactics to concentrated portfolio, so that still goes along with the school of thaught that suggest 5-6 companies.

well, i hope i will be able to give you update on my new tactics

i agree that it depends on ones time but a reasonably well focused portfolio shd perform better than an over diversified one.

i presently hv 20 companies in my portfolio and i hope to reduce it to 12...with over 80% of my money in 6 of them.

the remaining 20% helps me to monitor events in other sectors of the market since a vary large part of my investment is in the banking sector.

it also helps me to take a reasonable position in some fairly risky stocks with potentials for high return.

[olusolakemmy]

Originally Posted by billions

i agree that it depends on ones time but a reasonably well focused portfolio shd perform better than an over diversified one.

i presently hv 20 companies in my portfolio and i hope to reduce it to 12...with over 80% of my money in 6 of them.

the remaining 20% helps me to monitor events in other sectors of the market since a vary large part of my investment is in the banking sector.

it also helps me to take a reasonable position in some fairly risky stocks with potentials for high return.

u r very correct.
we are managers, some managers are succesful while some are not, why? they all have different approaches.

[tonidol]

Something crucial for me is risk diversification. No matter how good banking or oil stocks are doing, l cannot put 80% of my portfolio in a single sector.

The implication is that a single unfavourable law from the government on that sector means l will be in big trouble. You may say you will exit as soon as something unfavourable comes up but do not forget that every Investor takes news relating to their investment very seriously. Under adverse situations, you may even be unable to sell blue chip stocks.

I believe every sector has a performing stock, my humble opinion is that we should spread the risk. I cannot take chances as all my investments in Naija are in the Stock market though desperately considering plunging into non-troublematic land investment.

[zainabusman]

Originally Posted by tonidol

Something crucial for me is risk diversification. No matter how good banking or oil stocks are doing, l cannot put 80% of my portfolio in a single sector.

The implication is that a single unfavourable law from the government on that sector means l will be in big trouble. You may say you will exit as soon as something unfavourable comes up but do not forget that every Investor takes news relating to their investment very seriously. Under adverse situations, you may even be unable to sell blue chip stocks.

I believe every sector has a performing stock, my humble opinion is that we should spread the risk. I cannot take chances as all my investments in Naija are in the Stock market though desperately considering plunging into non-troublematic land investment.

I agree it is important to spread risk across sectors. However, it is very challenging in Nigeria not to concentrate on banks.

In the past i was very careful to limit my exposure to banks but i realised i was missing out. Look at the profits the banks are churning out. No sector can match the phenomenal growth in earnings of banks in Nigeria.

Furthermore, as quoted banks are regulated by both SEC and CBN they tend to be more prompt in releasing their results. There are exceptions off course.

Finally i dont expect the CBN to come up with new rules that will destablise the sector. The financial sector is too critical to be handled without due care.

All the same i try to limit my exposure to no more than 60% in banks. In addition, i have real estate investment. That helps to reduce overall risk.

[tonidol]

Originally Posted by zainabusman

I agree it is important to spread risk across sectors. However, it is very challenging in Nigeria not to concentrate on banks.

In the past i was very careful to limit my exposure to banks but i realised i was missing out. Look at the profits the banks are churning out. No sector can match the phenomenal growth in earnings of banks in Nigeria.

Furthermore, as quoted banks are regulated by both SEC and CBN they tend to be more prompt in releasing their results. There are exceptions off course.

Finally i dont expect the CBN to come up with new rules that will destablise the sector. The financial sector is too critical to be handled without due care.

All the same i try to limit my exposure to no more than 60% in banks. In addition, i have real estate investment. That helps to reduce overall risk.

Zainab, pls tell me more about real estate investment opportunities in Naija which you have sized up yourself. I don't want Omonile wahala.

Pls hook me on sina_syntax@yahoo.co.uk

[billions]

As ones capital grows,its good to invest about 25% of its total worth in properties.i spoke to one man who has 8 houses in naija but he said he has problem of collecting rent from some tenants...dat dey just dont like paying.He advised dat one shd think 2ce before building houses in naija bk of the associated stress...especially if u r not based in naija.

I dont want to build a house in naija and start running after tenants 4 rent so i am considering getting a house in d uk but its expensive.

Pls is d situation in naija dat bad??????????

[joelez]

Please can anyone tell me what is happenning with Dangote stocks.
I bougth Dangote Sugar at N46.00 but look at the price now. Is my money trapped?

[tonidol]

Originally Posted by joelez

Please can anyone tell me what is happenning with Dangote stocks.
I bougth Dangote Sugar at N46.00 but look at the price now. Is my money trapped?

Who advised you to buy Dangote Sugar at N46 and at what time? If you bought it on a short term basis to offload at its peak price, it may be partially okay but l do not think the returns will be special except you are investing millions of Naira on it to have substantial returns.

Dangote Sugar did an IPO in December 2006 @ N18. Immediately after listing in March 2007, the peak price attained after a bull run was N56.

In expectation of the Dec 31 2007 FYE results earlier his year, the peak price attained was about N51.

I cannot say exactly what the future holds in terms of exceeding the initial peak prices it has attained in the past but you may have to hold this stock till release of DEC 31 2008 FYE results (expected early next year) to offload to make marginal gains and then take position between N30-N35 if you are still interested in this stock.

This is my own opinion but let your own investment strategy determine what you will do. Always do your analysis before buying stock. Do not just take what a Broker tells you. You are on a good forum where stocks are well analysed from diverse perspectives.

Good luck but this is not the right thread for Dangote Sugar. I will copy this message in the right thread and you can follow up from there.

[nwoyearoh]

Originally Posted by billions

As ones capital grows,its good to invest about 25% of its total worth in properties.i spoke to one man who has 8 houses in naija but he said he has problem of collecting rent from some tenants...dat dey just dont like paying.He advised dat one shd think 2ce before building houses in naija bk of the associated stress...especially if u r not based in naija.

I dont want to build a house in naija and start running after tenants 4 rent so i am considering getting a house in d uk but its expensive.

Pls is d situation in naija dat bad??????????

Billions,

I don't know about the 25% for portfolio diversification in real estate; I think it depends on how old you are. Investing in "normal' real estate (i.e. middle of the road location, etc) would yield returns much less than what you may get from bonds.

However, if you have a war chest you may try building in choice (I mean real choice) locations, in places like Abuja/Lagos/PH, and rent to Corporate clients. Then you may not have to go through the stress of collecting rent the hard way. Just get a good lawyer (with real estate leanings) to assist in managing it for you - since you are probably based outside Nigeria. Make sure the lawyer is not your brother - that will create another set of problems.

Good luck in your "house building/purchasing" venture.

[nwoyearoh]

Originally Posted by chokit

"Owing stock is like having children- dont get involve more than you can handle.The part time stock keeper probably has time to follow 8-12 companies and buy and sell stocks as condition warrants.There dont have to be more than 5 stocks in the portfolio at any one time."This is no 8 goldenrule of PETER LYNCH from his book Beating the street,i think we may learn from this to decide how may companies we have the capacity to care for in our portfolio.
Personally i have 15 companies in my portfolio and only 4 of them are of great concern to me:

Transcorp ipo

Wema

Big treat

Dunlop

Men, you are damn correct! : Charles Munger and Warren Buffett are apostles of focused investing - if after careful/good analyses and one is happy with the outcome, one is supposed to buy as large a portion that the money can get.

[Babs_O]

I think 20 to 50 is not bad. Some degree of turnover (i.e. selling and buying) is also good to keep the portfolio healthy.

Property in Nigeria is not too great at the moment. I think it may even be less rewarding with increase in mortgage products in the coming years. Property is extremely valuable in periods of galloping inflation.