By Alvin Chow
You may have wondered about this question before.
How many stocks should I own to be “sufficiently diversified”?
You may have gotten advise from people (especially the finance professionals) advocating the importance of diversifying your portfolio.
Because: “Having too little stocks is risky.”
On the other hand, you may have probably also heard others stress about the importance of holding only a handful of stocks (not more than 5).
Because: “You would not have time to understand and monitor so many stocks.”
So…who is right?
I admit, this is not an easy question to answer.
In fact, I would like you to answer more questions:
- Do you want to be rich, or are you happy with accumulating wealth steadily?
- Do you have the temperament required to be rich?
Warren Buffett’s Secret
Many people believe that Warren Buffett became rich because of his phenomenal stock picking ability.
It is not exactly true.
His real secret to getting rich is by concentrating his bets. He has shared this many times throughout his life, but most people did not pick up on it.
One of the favourite analogies is got to be about the baseball player, Ted Williams.
Ted is considered the best hitter in …read more