How many is enough?
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Sean K
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30 is manageable for longer term investing. Depends on how much time you have to watch them, if you need to.
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Anything over 10 would be hard work to manage if trading constantly.
Investing no problems if you know where you are going.
Currently 2 long and 1 short CFDs.
Investing no problems if you know where you are going.
Currently 2 long and 1 short CFDs.
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I've got shares in about 30 companies spread between my wife, myself and my super.
Every time I learn about a new company with good prospects I just can't help myself and find it really hard not to jump in!
Seriously though, although I have one or two duds, I like being diversified.
Ferret
Every time I learn about a new company with good prospects I just can't help myself and find it really hard not to jump in!
Seriously though, although I have one or two duds, I like being diversified.
Ferret
I have maybe 15-20 stocks but decent holdings (90% of value) in just 6: AGS BMN ADI EKA MGX INL, lots of smaller holdings in long shots...each to his own as to what is right, no question I could be a lot more diversified but I am comfortable taking some reasonable risk
Knobby22
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I have 13 at present. 14 is my preferred maximum.
It is dangerous to own too many as you will miss things and you are more likely to get only average returns.
It is dangerous to own too many as you will miss things and you are more likely to get only average returns.
Out Too Soon
My real name is King Julian ;)
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Ferret said:
I should really have only a few now I'm more confident about my choices but like ferret I'm always on the lookout for another bargain. If too much of my portfolio is in the red like now then I"m holding more rather than having a turn over & the numbers are climbing. 10 @ present & my eyes on PLA.
Unlike more impatient traders I rarely sell @ a loss, I'd rather wait.
So it really depends on your style & experience.
theasxgorilla
Problem solved... next bubble.
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Right now, I have 9 positions.
7 are longer term LONG trades (6 to 18 months). 2 are very short term SHORT trades. I think that 8 position trades and up to 4 CFDs is about my max. Anything greater than this and the benefit of picking shares becomes too diluted for me. I'm trying to beat the index, not be it.
7 are longer term LONG trades (6 to 18 months). 2 are very short term SHORT trades. I think that 8 position trades and up to 4 CFDs is about my max. Anything greater than this and the benefit of picking shares becomes too diluted for me. I'm trying to beat the index, not be it.
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4 long (ORI/BHP/ZFX/BOQ)
1 short (RIO)
1 short (RIO)
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Long 3 stocks, plus 1 option play.
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This is a good question and got me thinking - my admittedly long-winded thoughts below.
There are all sorts of factors that could be considered when determining the number of shares to hold at any one time. I don't set any limits - the number of shares that I hold is determined by my position sizing strategy.
Factors to consider;
1. Position sizing strategy. If you are using % risk position sizing strategy then you are not focused on the number of positions. You look at the amount of risk in each position. I know someone will raise portfolio heat as an issue, but I don't consider it as a major factor.
If you use 10% of capital in each trade then obviously the maximum number of trades will be around 10 - unless you add more capital to the mix.
2. The amount of trading capital. Someone with $10 million will probably hold more shares than someone with only $100,000. Liquidity becomes a factor and can limit position size and therefore the amount of capital in each trade.
3. Liquidity. No point trying to buy $100,000 shares in a company that only turns over $20,000 a day. So position size would need to be decreased, or the trade could be discarded.
4. Time frame that you trade. I trade weekly a weekly time frame so I have a bit of time to handle a larger number of positions. Time frame can also impact on liquidity as it is possible to take a position over a number of days, or even weeks, with a weekly or monthly time frame.
5. Holding length of trades. A buy and hold strategy can obviously handle more stocks.
6. Broker quality - how easy is to exit a number of positions at the one time. On-line brokers means that the trader does all the work. Handling a large number of positions in a short time-frame means that errors could creep in. Sometimes I think that it would be nice to ring up a broker and give him my orders for the week, but then I think of the brokerage costs!
7. Trading system / decision making approach. If you have to do vast amounts of research before making a decision this could impact on the number of positions held. If you scan the market on the weekend and do a minimal amount of research of the signals (or no research on the sells) then it is possible that more positions can be handled.
8. Portfolio growth - as my portfolio (hopefully) grows, or I add in extra capital, it takes time for the increased position size to filter through the entire portfolio. So I end up taking up more positions to soak up available capital. If I go to mainly to cash then I can start from scratch, but I can end up holding positions based on my capital from over a year ago, even though I more than doubled my capital.
I am sure that there are other factors I have missed, but these are the obvious ones. I currently hold 17 positions in my super fund With enough money to take 1 or 2 more positions. I have a similar number in my investment company, although it is only a 3rd of the size of my super fund.
There are all sorts of factors that could be considered when determining the number of shares to hold at any one time. I don't set any limits - the number of shares that I hold is determined by my position sizing strategy.
Factors to consider;
1. Position sizing strategy. If you are using % risk position sizing strategy then you are not focused on the number of positions. You look at the amount of risk in each position. I know someone will raise portfolio heat as an issue, but I don't consider it as a major factor.
If you use 10% of capital in each trade then obviously the maximum number of trades will be around 10 - unless you add more capital to the mix.
2. The amount of trading capital. Someone with $10 million will probably hold more shares than someone with only $100,000. Liquidity becomes a factor and can limit position size and therefore the amount of capital in each trade.
3. Liquidity. No point trying to buy $100,000 shares in a company that only turns over $20,000 a day. So position size would need to be decreased, or the trade could be discarded.
4. Time frame that you trade. I trade weekly a weekly time frame so I have a bit of time to handle a larger number of positions. Time frame can also impact on liquidity as it is possible to take a position over a number of days, or even weeks, with a weekly or monthly time frame.
5. Holding length of trades. A buy and hold strategy can obviously handle more stocks.
6. Broker quality - how easy is to exit a number of positions at the one time. On-line brokers means that the trader does all the work. Handling a large number of positions in a short time-frame means that errors could creep in. Sometimes I think that it would be nice to ring up a broker and give him my orders for the week, but then I think of the brokerage costs!
7. Trading system / decision making approach. If you have to do vast amounts of research before making a decision this could impact on the number of positions held. If you scan the market on the weekend and do a minimal amount of research of the signals (or no research on the sells) then it is possible that more positions can be handled.
8. Portfolio growth - as my portfolio (hopefully) grows, or I add in extra capital, it takes time for the increased position size to filter through the entire portfolio. So I end up taking up more positions to soak up available capital. If I go to mainly to cash then I can start from scratch, but I can end up holding positions based on my capital from over a year ago, even though I more than doubled my capital.
I am sure that there are other factors I have missed, but these are the obvious ones. I currently hold 17 positions in my super fund With enough money to take 1 or 2 more positions. I have a similar number in my investment company, although it is only a 3rd of the size of my super fund.
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The correct number is 18 which I believe is the efficient frontier.
http://www.riskglossary.com/link/efficient_frontier.htm
http://www.riskglossary.com/link/efficient_frontier.htm
So I guess horses for courses...
I'm with ferret.. Love an opportunity and hate to miss one.
I keep heaps of liquidity available and buy small parcels with a clear profit margin in mind. Everything I own, except a few banks and the index are short term, unless they go below what my BE point is, then they become long
I'm with ferret.. Love an opportunity and hate to miss one.
I keep heaps of liquidity available and buy small parcels with a clear profit margin in mind. Everything I own, except a few banks and the index are short term, unless they go below what my BE point is, then they become long
Out Too Soon
My real name is King Julian ;)
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LOL, good one Gorilla!theasxgorilla said:
Julia
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Stevo makes a really relevant point when he mentions available capital.
If you had only a small amount of capital to invest, then you'd surely not be holding a large number of companies.
I currently have 19, all long, and am sitting on nearly an equivalent value in cash.
Julia
If you had only a small amount of capital to invest, then you'd surely not be holding a large number of companies.
I currently have 19, all long, and am sitting on nearly an equivalent value in cash.
Julia
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