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I have personally found that the longer your invested stock list, the more time you need to spend on understanding each stock. with each quarter results, you will need to go thru the results for all your stocks.
unless you have a lot of time, having more than 10 stocks to manage will be difficult. most of us have a full time job, family plus other commitments.
the other thing i found is that the more spread out you are, the effect on your portfolio from a multibagger is lessen. so, spend time to find the best stocks and allocate more $ to that stock. if your assessment is correct, you will be rewarded handsomely.
I typically try to limit my stock to 10 or less. of course, it will be different for you. it will depend on your situation.
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(26-06-2012, 02:13 PM)changwk Wrote: I have personally found that the longer your invested stock list, the more time you need to spend on understanding each stock. with each quarter results, you will need to go thru the results for all your stocks.
unless you have a lot of time, having more than 10 stocks to manage will be difficult. most of us have a full time job, family plus other commitments.
the other thing i found is that the more spread out you are, the effect on your portfolio from a multibagger is lessen. so, spend time to find the best stocks and allocate more $ to that stock. if your assessment is correct, you will be rewarded handsomely.
I typically try to limit my stock to 10 or less. of course, it will be different for you. it will depend on your situation.
Extracts from this book 'The Warren Buffett Way' by Robert G. Hagstrom, Library : 332.6 HAG-[BIZ] <pg 160>,
THE FOCUS INVESTOR'S GOLDEN RULES
1. Concentrate your investments in outstanding companies run by strong management.
2. Limit yourself to the number of companies you can truly understand. Ten to twenty is good, more than twenty is asking for trouble.
3. Pick the very best of your good companies, and put the bulk of your investment there.
4. Think long-term: five to ten years, minimum.
5. Volatility happens. Carry on.
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(26-06-2012, 12:58 PM)mrEngineer Wrote: Hi yeokiwi,
Do you have a limit on how long your list of stocks should be? Care to share the rough number on the list? 10, 20, 30? Thanks
No. Currently I have more than 30 stocks.
I have a hard time deciding which stock is better and so I might as well take all that fit my criteria.
Just like investing in Singapore telecom sector. There are basically three companies, Singtel, Starhub and M1.
So how would you invest?
Some will do a detailed analysis of the three companies and put his bets on one.
As for me, I will naturally think that these companies are about the same.
Singtel is the strongest among all with international presence. But, its dividend yield is the lowest among three.
Starhub is the next stronger one with high dividend yield since it basically distributes all earnings to the shareholders.
M1 is the smallest with good yield. However, it is struggling to increase its presence in Singapore.
Since all three has their merits and in the long term, I really have no idea which will offer a better return. One of the ways is simply to allocate 1/3 of the fund to each one of them.
But if yield is preferred, then maybe it makes sense to reduce the investment proportion in Singtel to 20% or lower.
However, for above average return, investors require some special events to happen. Special dividend, spinoffs(business trusts??), privatization or whatever. The probability of capturing these events is likely to be higher if an investor owns the three stocks than one.
Of course, if you put all your bet on one and able to capture a special event. Then the return is significantly higher.
So Probability of special events happening vs Return. How do you balance?
Does owning three reduce your returns? May or may not.
The probability of choosing the right one is 33% if you choose only one.
If you choose the wrong one(66% probability), you will only be receiving the average return in that sector.
If you have three of them, 33% of your money will strike jackpot. The remaining 66% will return the average return.
Striking jackpot(special dividend, delisting offer, spinoffs, rerating..) does improve the investment return rather significantly.
And in most of my jackpot cases, I have no idea that they will give me such returns when I first invest in it. (who the hell will know????)
Lastly, I do not own any significant stake in any of the telecom stocks(except singtel in my CPF and 190 shares from the great singtel IPO.)
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(26-06-2012, 03:37 PM)yeokiwi Wrote: (26-06-2012, 12:58 PM)mrEngineer Wrote: Hi yeokiwi,
Do you have a limit on how long your list of stocks should be? Care to share the rough number on the list? 10, 20, 30? Thanks
No. Currently I have more than 30 stocks.
I have a hard time deciding which stock is better and so I might as well take all that fit my criteria.
Just like investing in Singapore telecom sector. There are basically three companies, Singtel, Starhub and M1.
So how would you invest?
Some will do a detailed analysis of the three companies and put his bets on one.
As for me, I will naturally think that these companies are about the same.
Singtel is the strongest among all with international presence. But, its dividend yield is the lowest among three.
Starhub is the next stronger one with high dividend yield since it basically distributes all earnings to the shareholders.
M1 is the smallest with good yield. However, it is struggling to increase its presence in Singapore.
Since all three has their merits and in the long term, I really have no idea which will offer a better return. One of the ways is simply to allocate 1/3 of the fund to each one of them.
But if yield is preferred, then maybe it makes sense to reduce the investment proportion in Singtel to 20% or lower.
However, for above average return, investors require some special events to happen. Special dividend, spinoffs(business trusts??), privatization or whatever. The probability of capturing these events is likely to be higher if an investor owns the three stocks than one.
Of course, if you put all your bet on one and able to capture a special event. Then the return is significantly higher.
So Probability of special events happening vs Return. How do you balance?
Does owning three reduce your returns? May or may not.
The probability of choosing the right one is 33% if you choose only one.
If you choose the wrong one(66% probability), you will only be receiving the average return in that sector.
If you have three of them, 33% of your money will strike jackpot. The remaining 66% will return the average return.
Striking jackpot(special dividend, delisting offer, spinoffs, rerating..) does improve the investment return rather significantly.
And in most of my jackpot cases, I have no idea that they will give me such returns when I first invest in it. (who the hell will know????)
Lastly, I do not own any significant stake in any of the telecom stocks(except singtel in my CPF and 190 shares from the great singtel IPO.)
(who the hell will know????)
i like what you said. We are usually caught by surprise. 
So don't be so cock-sure. Though i only have purchased Singtel so far.
WB:-
1) Rule # 1, do not lose money.
2) Rule # 2, refer to # 1.
3) Not until you can manage your emotions, you can manage your money.
Truism of Investments.
A) Buying a security is buying RISK not Return
B) You can control RISK (to a certain level, hopefully only.) But definitely not the outcome of the Return.
NB:-
My signature is meant for psychoing myself. No offence to anyone. i am trying not to lose money unnecessary anymore.
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(26-06-2012, 03:53 PM)Temperament Wrote: (who the hell will know????)
i like what you said. We are usually caught by surprise.
So don't be so cock-sure. Though i only have purchased Singtel so far.
Hi uncle Temperament,
I am the one that "be so cock-sure" on M1 
It is quite a fun if you had stroked a jackpot, due partly to you own work, rather on fully on luck. 
“夏则资皮，冬则资纱，旱则资船，水则资车” - 范蠡
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WB:-
1) Rule # 1, do not lose money.
2) Rule # 2, refer to # 1.
3) Not until you can manage your emotions, you can manage your money.
Truism of Investments.
A) Buying a security is buying RISK not Return
B) You can control RISK (to a certain level, hopefully only.) But definitely not the outcome of the Return.
NB:-
My signature is meant for psychoing myself. No offence to anyone. i am trying not to lose money unnecessary anymore.
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“夏则资皮，冬则资纱，旱则资船，水则资车” - 范蠡
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(26-06-2012, 04:23 PM)CityFarmer Wrote: (26-06-2012, 04:16 PM)Temperament Wrote: (26-06-2012, 04:06 PM)CityFarmer Wrote: (26-06-2012, 03:53 PM)Temperament Wrote: (who the hell will know????)
i like what you said. We are usually caught by surprise.
So don't be so cock-sure. Though i only have purchased Singtel so far.
Hi uncle Temperament,
I am the one that "be so cock-sure" on M1
It is quite a fun if you had stroked a jackpot, due partly to you own work, rather on fully on luck.
i don't quite understand what you mean? To me it's only possible if you have done insider trading. Which is illegal anywhere in the world. Of course, anything is possible.
Example is dydx on Adampak GO.
Is it due fully to luck, or it is partly to his own work?
If you have done your due diligence on a stock, and you have profited from it the next moment, so be it. The next year or the next month or even the next week who knows? Not until you have sold, i don't think you can say you have profited. Sorry that's my take. No one can say what is going to happen the next moment. That's my belief in life. IMHO.
WB:-
1) Rule # 1, do not lose money.
2) Rule # 2, refer to # 1.
3) Not until you can manage your emotions, you can manage your money.
Truism of Investments.
A) Buying a security is buying RISK not Return
B) You can control RISK (to a certain level, hopefully only.) But definitely not the outcome of the Return.
NB:-
My signature is meant for psychoing myself. No offence to anyone. i am trying not to lose money unnecessary anymore.
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hi yeokiwi, how come these days don't have the great 'singtel' ipo for citizens to subscribe anymore?
and what do u mean by rerating?
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Work is necessary to unearth value propositions. There is nothing more you can do (apart from asking other people to buy) to help you profit from it. Once you've done your share of the work, let the market do its share. 
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