Portfolio Diversification by cost or stock

(07-11-2015, 10:05 PM)CityFarmer Wrote:

(07-11-2015, 09:05 AM)greengiraffe Wrote: For beginners, diversification is a good learning process.

However, over time when you are comfortable with yr strategy, one should start to evolve into a concentration strategy.

Concentration enables focus of time and effort. The main rationale behind a concentration strategy is to sharpen the focus on businessmen that will deliver and work hard for our limited capital and time.

Real businesses and businessmen are hard to come by and based on my personal experience, there are only 30% of such companies in the listed universe.

Given that valuation and mkt timing may be other dynamic considerations, frankly one can at best screened down to perhaps 50% of the 30% investible universe, ie 15% of the listed universe.

So one should seriously ask how many investible stocks can one have in one's portfolio...

Caveat: Got to work hard over time to be able to pursue a concentration strategy.

I concur.  GG 

Thank you sir...

Ultimate portfolio,

33 counters @ 3.33% allocation each.

OR

Just buy Index stock.

(08-11-2015, 12:51 PM)brattzz Wrote: Ultimate portfolio,

33 counters @ 3.33% allocation each.

OR

Just buy Index stock.

haha...

isn't that cyclone's portfolio??

Diversification is one of the important tools to management risk, mainly unknown risks. The other important tool, is MOS (Margin of Safety). Generally, the higher the MOS used, the lesser diversification required, for a similar performance.

We should put equal weight-age on both, and strike a balance, within your preference.

The effectiveness of MOS, depend on the accuracy of valuation, i.e. the reference. Ultimately, accurate valuation is the most important skill.  Diversification is limited, by your time/effort to effectively filter the stocks, based on the set criteria.

I prefer concentrated approach, with high in MOS, and moderate in diversification. I do believe it will give the best performance over a longer term.

(sharing few point, hope to add-value to the discussion)

(09-11-2015, 09:22 AM)CityFarmer Wrote: Diversification is one of the important tools to management risk, mainly unknown risks. The other important tool, is MOS (Margin of Safety). Generally, the higher the MOS used, the lesser diversification required, for a similar performance.

We should put equal weight-age on both, and strike a balance, within your preference.

The effectiveness of MOS, depend on the accuracy of valuation, i.e. the reference. Ultimately, accurate valuation is the most important skill.  Diversification is limited, by your time/effort to effectively filter the stocks, based on the set criteria.

I prefer concentrated approach, with high in MOS, and moderate in diversification. I do believe it will give the best performance over a longer term.

(sharing few point, hope to add-value to the discussion)

Very true.. accurate  valuation is an elite set of skills, which I do hope I will pick up soon.

Still learning and somehow have seen my watchlist to tend to favour more towards blue chips. What is everyone's opinion on the STI ETF? A friend recommended that as a form of diversification.

(17-11-2015, 01:10 AM)Berlok Wrote:

(09-11-2015, 09:22 AM)CityFarmer Wrote: Diversification is one of the important tools to management risk, mainly unknown risks. The other important tool, is MOS (Margin of Safety). Generally, the higher the MOS used, the lesser diversification required, for a similar performance.

We should put equal weight-age on both, and strike a balance, within your preference.

The effectiveness of MOS, depend on the accuracy of valuation, i.e. the reference. Ultimately, accurate valuation is the most important skill.  Diversification is limited, by your time/effort to effectively filter the stocks, based on the set criteria.

I prefer concentrated approach, with high in MOS, and moderate in diversification. I do believe it will give the best performance over a longer term.

(sharing few point, hope to add-value to the discussion)

Very true.. accurate  valuation is an elite set of skills, which I do hope I will pick up soon.

Still learning and somehow have seen my watchlist to tend to favour more towards blue chips. What is everyone's opinion on the STI ETF? A friend recommended that as a form of diversification.

If we take STI ETF as a stock, it has it's own valuation too.
It should be a "safe long term stock" for retirement planning unless Singapore "cave-in".
(This is my more investing and less analysing make simple. Ha! Ha!)
i have not touched STI ETF so far.

(17-11-2015, 01:10 AM)Berlok Wrote:

(09-11-2015, 09:22 AM)CityFarmer Wrote: Diversification is one of the important tools to management risk, mainly unknown risks. The other important tool, is MOS (Margin of Safety). Generally, the higher the MOS used, the lesser diversification required, for a similar performance.

We should put equal weight-age on both, and strike a balance, within your preference.

The effectiveness of MOS, depend on the accuracy of valuation, i.e. the reference. Ultimately, accurate valuation is the most important skill.  Diversification is limited, by your time/effort to effectively filter the stocks, based on the set criteria.

I prefer concentrated approach, with high in MOS, and moderate in diversification. I do believe it will give the best performance over a longer term.

(sharing few point, hope to add-value to the discussion)

Very true.. accurate  valuation is an elite set of skills, which I do hope I will pick up soon.

Still learning and somehow have seen my watchlist to tend to favour more towards blue chips. What is everyone's opinion on the STI ETF? A friend recommended that as a form of diversification.

I reckon basic value investing rules apply to ETFs too i.e. focus on quality, and pay lower price (with high MOS).

I have received a market update on SGX ETFs today. May be helpful to you

http://www.sgx.com/wps/wcm/connect/sgx_e...ntent=ETFs 

(not vested in any ETF)