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Ginger_steps_
13-12-2013, 01:59 AM
Hi all,

Just wandering what the experienced investors recommend for structuring a portfolio? I understand that diversifying and spreading the risk is a good idea. However on the other end of the spectrum shares in too many companies mean you begin to average the market... So how many is too many for the NZX? My main holdings in volume weighted order are SUM, XRO, ATM, HNZ, SML, EBO, PEB which account for 80% of my capital. TEL, WYN, FRE, SNK and WDT account for 20%. Have I gone overboard here?? I've accumulated these shares over the past year and am sitting 24% in the green as of today, however am starting to think I have made some silly decisions. Would appreciate some advice in regards to this as well as what thoughts of my portfolio are in gerneral?

I have emptied my savings account and hope to invest over the next 30+ years, pulling out a house deposit at some point and an overseas holiday every now and then if all goes well. Obviously I have a taste for risk/speculative/gambling but might not really understand the extent of it either... hope this doesn't turn round to bite me quickly!

Moosie - you seem to be a sleepless ST machine who helps the newbs out a bit - what do you think?

Ive started reading the intelligent investor which thus far has told me Im doing just about everything wrong! oh well

Onwards and upwards!

Ginger

born2invest
13-12-2013, 08:24 AM
Just wandering what the experienced investors recommend for structuring a portfolio? I understand that diversifying and spreading the risk is a good idea. However on the other end of the spectrum shares in too many companies mean you begin to average the market... So how many is too many for the NZX?

Warren Buffett & Charlie Munger advocate that 7 stocks is enough diversification. I currently own 2x stocks on the ASX and that's all my investments apart from cash that I hold. I see no point investing into an overvalued company I know little about just for the sake of diversification.


My main holdings in volume weighted order are SUM, XRO, ATM, HNZ, SML, EBO, PEB which account for 80% of my capital. TEL, WYN, FRE, SNK and WDT account for 20%. Have I gone overboard here??

Only you can make that call if you have overdone it. Personally, for me 11 stocks is too much. My 11th best idea would be no way near my 1st best idea.


I've accumulated these shares over the past year and am sitting 24% in the green as of today,

11 stocks over the past year seems like a lot. Just because you are up 24% this year doesn't mean much as the whole market has gone up around the same amount. Don't confuse brains with a bull market my friend.


however am starting to think I have made some silly decisions.

Such as?


Would appreciate some advice in regards to this as well as what thoughts of my portfolio are in gerneral?


I would go through each individual stock in your portfolio and decide on whether you would buy them again if you had to do it all over again, if not, sell it.


I have emptied my savings account and hope to invest over the next 30+ years, pulling out a house deposit at some point and an overseas holiday every now and then if all goes well.

You have emptied out your entire savings and bought 11 stocks in the past year. To me, it sounds like you got a bit of itchy feet and had to buy everything at once. Once again, I'd advise to look through each individual stock and ask yourself if you still want to keep it.


Obviously I have a taste for risk/speculative/gambling but might not really understand the extent of it either... hope this doesn't turn round to bite me quickly!

Can't help you out here sorry mate. I'm not a speculator, I'm an investor and dispise gambling.


Ive started reading the intelligent investor which thus far has told me Im doing just about everything wrong! oh well


Good book to read. I'd advise asking yourself what kind of investment strategy you want to follow and then learn all you can about it.

Everyone goes through the initial stages of investing, making mistakes, learning, wishing they had done this, hadn't done that, etc. The key is to learn from your mistakes and use the skills to make better decisions in the future.

gv1
13-12-2013, 09:15 AM
Warren Buffett & Charlie Munger advocate that 7 stocks is enough diversification. I currently own 2x stocks on the ASX and that's all my investments apart from cash that I hold. I see no point investing into an overvalued company I know little about just for the sake of diversification.



Only you can make that call if you have overdone it. Personally, for me 11 stocks is too much. My 11th best idea would be no way near my 1st best idea.



11 stocks over the past year seems like a lot. Just because you are up 24% this year doesn't mean much as the whole market has gone up around the same amount. Don't confuse brains with a bull market my friend.



Such as?



I would go through each individual stock in your portfolio and decide on whether you would buy them again if you had to do it all over again, if not, sell it.



You have emptied out your entire savings and bought 11 stocks in the past year. To me, it sounds like you got a bit of itchy feet and had to buy everything at once. Once again, I'd advise to look through each individual stock and ask yourself if you still want to keep it.



Can't help you out here sorry mate. I'm not a speculator, I'm an investor and dispise gambling.



Good book to read. I'd advise asking yourself what kind of investment strategy you want to follow and then learn all you can about it.

Everyone goes through the initial stages of investing, making mistakes, learning, wishing they had done this, hadn't done that, etc. The key is to learn from your mistakes and use the skills to make better decisions in the future.

Wow, great advise. I have learnt the hard way, wish I knew you earlier.What do you do for job born2invest. Big salute.

peat
13-12-2013, 09:20 AM
I seem to think the Intelligent Investor provides Grahams view on the number of stocks sufficient to gain the benefits of diversification.
Also one needs to consider the correlation between the stocks themselves to maximise the benefits. no good having stocks all in the same sector.

Perhaps try and understand the concepts behind modern portfolio theory so as to glean how to conceptually (if not mathematically) apply to your own situation even if you disagree with the tenets or assumptions of that theory .
http://www.investopedia.com/walkthrough/fund-guide/introduction/1/modern-portfolio-theory-mpt.aspx
http://en.wikipedia.org/wiki/Modern_portfolio_theory

The following chart graphically represents the reduction in risk, as measured by standard deviation, vs no of stocks in the portfolio, so gives you some idea what might be a suitable number of stocks to hold.

5185
Obviously the more stocks the less risk to the portfolio from each specific stocks unique risk (cf market risk which cannot be diversified away) but this is of course met with increased work to manage them.
Also one needs to consider the correlation between the stocks, this could be done mathematically but even just considering them by sector would be a start. The higher the correlation the less diversification one achieves by including that extra stock.

Longhaul
13-12-2013, 10:54 AM
Like you I only started this year and it was lucky for us to start in a bull market. I do worry that my expectations have been set a little high though!

Anyway, a couple of lessons I've picked up that may or may not be useful:

Don’t buy a share that you wouldn’t want to hold for the long term

The best stock to buy is probably one you already own (thanks SparkyTC)

Focus on future value. The price you paid is irrelevant to how the stock is going to perform. (again, thanks SparkyTC)

born2invest
13-12-2013, 02:54 PM
Wow, great advise. I have learnt the hard way, wish I knew you earlier.What do you do for job born2invest. Big salute.

I work at The Warehouse in logistics.

born2invest
13-12-2013, 02:56 PM
I seem to think the Intelligent Investor provides Grahams view on the number of stocks sufficient to gain the benefits of diversification.
Also one needs to consider the correlation between the stocks themselves to maximise the benefits. no good having stocks all in the same sector.

Perhaps try and understand the concepts behind modern portfolio theory so as to glean how to conceptually (if not mathematically) apply to your own situation even if you disagree with the tenets or assumptions of that theory .
http://www.investopedia.com/walkthrough/fund-guide/introduction/1/modern-portfolio-theory-mpt.aspx
http://en.wikipedia.org/wiki/Modern_portfolio_theory

The following chart graphically represents the reduction in risk, as measured by standard deviation, vs no of stocks in the portfolio, so gives you some idea what might be a suitable number of stocks to hold.

5185
Obviously the more stocks the less risk to the portfolio from each specific stocks unique risk (cf market risk which cannot be diversified away) but this is of course met with increased work to manage them.
Also one needs to consider the correlation between the stocks, this could be done mathematically but even just considering them by sector would be a start. The higher the correlation the less diversification one achieves by including that extra stock.

I personally think modern portfolio theory is a load of rubbish and you will reduce your returns or mirror the index if you follow this method.

You are better off learning about individual companies and gaining an edge over everyone else by knowing the company better than they do.

born2invest
13-12-2013, 02:58 PM
The price you paid is irrelevant to how the stock is going to perform

Are you serious??

The price you pay for a stock is a direct relation to the returns you are going to achieve!

Snoopy
13-12-2013, 08:37 PM
Hi all,

Just wandering what the experienced investors recommend for structuring a portfolio? I understand that diversifying and spreading the risk is a good idea. However on the other end of the spectrum shares in too many companies mean you begin to average the market.


Not a bad thing in itself. Most investors and traders end up not beating the market. A low cost index fund based on the market will ensure that long term you become an above average investor.



.. So how many is too many for the NZX? My main holdings in volume weighted order are SUM, XRO, ATM, HNZ, SML, EBO, PEB which account for 80% of my capital. TEL, WYN, FRE, SNK and WDT account for 20%. Have I gone overboard here?? I've accumulated these shares over the past year and am sitting 24% in the green as of today, however am starting to think I have made some silly decisions. Would appreciate some advice in regards to this as well as what thoughts of my portfolio are in general?


No you haven't gone overboard. You have what I would call some speccy shares in there: XRO, ATM, PEB, SNK and WDT. But apart from perhaps having too many in the 'software' space, I would say this is the way to do it. Some would say get to know your speccy shares first, but I think you will find this very hard to do without encountering innocent hyperbole along the way. Keeping the speccies diversified into different sectors is IMO the right approach.

Meanwhile your 'conservative' shares look nicely diversified around industry groups too. I would say you are off to a good start. Well done.

SNOOPY

peat
13-12-2013, 11:38 PM
I personally think modern portfolio theory is a load of rubbish and you will reduce your returns or mirror the index if you follow this method.

You are better off learning about individual companies and gaining an edge over everyone else by knowing the company better than they do.

MPT is a form of diversification (http://en.wikipedia.org/wiki/Diversification_(finance)). Under certain assumptions (http://en.wikipedia.org/wiki/Modern_portfolio_theory#Assumptions) and for specific quantitative (http://en.wikipedia.org/wiki/Quantification) definitions of risk and return, MPT explains how to find the best possible diversification strategy.
If you disagree with the assumptions then yes you will disagree with the theory, but the question related to how to structure a diversified portfolio and MPT offers a solution to that.

Longhaul
14-12-2013, 03:44 PM
Are you serious??

The price you pay for a stock is a direct relation to the returns you are going to achieve!

Only meant in terms of the SP, not returns.

steve fleming
14-12-2013, 06:16 PM
http://www.smh.com.au/business/markets/no-investing-pain-no-investing-gain-20131213-2zblz.html

a good reason why I favour a diversified portfolio approach ( 15 to 25 stocks )

No matter how good you think you are, you are never going to get it 100% right (or 90% according to Lynch).....60% if you are lucky

the downgrades referred to in the article I imagine are two of CDA, SIV and WHK/CRH, all of which were favourites of the mid-cap value investor set this time last year...no matter how quality you may think a stock is, there is always potential for a left field event to impact earnings.

for that reason, if I had my portfolio spread across just two stocks, I seriously don't think I'd be able to sleep at night.

born2invest
14-12-2013, 09:16 PM
No matter how good you think you are, you are never going to get it 100% right (or 90% according to Lynch).....60% if you are lucky

for that reason, if I had my portfolio spread across just two stocks, I seriously don't think I'd be able to sleep at night.

The Mellegan fund held 1400 stocks so I'm sure a lot of them would have been poor performers.

If I held 25 stocks I couldn't sleep at night. I'm much happier with two.

steve fleming
14-12-2013, 09:53 PM
If I held 25 stocks I couldn't sleep at night. I'm much happier with two.

So, on a $1m portfolio, spread equally over two stocks, realistically you could be down $250k on one earnings downgrade / negative outlook.

Its that sort of capital wipeout that I seek to avoid, for that reason I have strict $ value exposure limits to individual stocks.

karen1
15-12-2013, 09:07 AM
My 2c worth.

Hi Sparky,

Great to see you dropping in regularly. Personally, I have found your latest post to have far greater value than '2c worth'!

I have gained a great deal from your post, as I have with many of yours over your time on here. It has been copied to my ST Gems list!

So, much appreciation, and hope to see many more posts from you.

steve fleming
15-12-2013, 10:09 AM
Having 20 different stocks with 5% each is mindless. You would be better to give your money to Milford or Fisher Funds, or buy 4 or 5 ETFs instead.

Depends on the sort of companies that you are investing in. In the micro/small cap universe there is the potential for substantial share price re-ratings.

In these cases, it only takes just one of these 5% exposures to multi-bag to have a far greater impact on a portfolio than a lot of larger weighted holdings that that perform in line or slightly ahead of market.

Obviously a 25% holding that multi bags is even better, if you can stomach the risk of holding that sort of exposure in those type of stocks.

born2invest
15-12-2013, 11:28 AM
So, on a $1m portfolio, spread equally over two stocks, realistically you could be down $250k on one earnings downgrade / negative outlook.

Its that sort of capital wipeout that I seek to avoid, for that reason I have strict $ value exposure limits to individual stocks.

Yes I could be.

Ginger_steps_
15-12-2013, 10:02 PM
Thank you all for the great responses! I really value your input and varying opinions.

Snoopy your words were music to my ears which have left me feeling like I havent made a mess of things but could do with some strengthening and of course further education on the stocks I already own. After some thought I have decided the only stock Im not happy with is Snakk and will look to exit when the time is right.

Feeling more confident about my portfolio now albeit a bit "speccy" I think I will top up some more Telecom in the next year and look to take a position in Mainfreight (a bit speccy right now too?) in a time of price weakness (missed the boat a couple of weeks back!) but other than that I would like to sit back, watch and learn for the duration of 2014.

The only comment I feel strongly against is that of Born2invest's (although i agreed with most of your comments). "My 11th best idea would be no way near my 1st best idea". I think that while I have many stocks lots of them are speculative in which case diversifying them makes sense - of which I have selected my favourites and weighted them accordingly. I remember a interview I heard a while with some big investor whose name escapes me (wasn't interested in the market at that point) who said that "of 100 investments 2 usually turn out to be brilliant stocks - and usually not the 2 you were expecting." Given what has just happened with CNU (and many others before it) a 2 stock portfolio seems to be a foolish and possibly emotional investment. My older brother - a seasoned investor and very successful accountant had 2 bluechips crash in a year out of his 8 stock portfolio. 2 years later he has done well to recoup his losses - however what if they were his 2 best ideas? I think in the end the truth is that no one has a clue what is round the bend for any stock and its important to have measures in place to protect you capital - I would rather mirror the market then be broke.

Thanks again all and look forward to any other opinions investors wish to put forward.

born2invest
16-12-2013, 08:03 AM
The only comment I feel strongly against is that of Born2invest's (although i agreed with most of your comments). "My 11th best idea would be no way near my 1st best idea". I think that while I have many stocks lots of them are speculative in which case diversifying them makes sense

What would make even more sense would be to not buy speculative stocks.

But I agree, I would ideally like to be more diversified and own 6-7 stocks, but I'm not going to buy either something I don't understand or something over-valued just so I can be "diversified". When the time comes and the price is right, I'll branch out and own a few more companies.

Just don't get into the trap of diversifying for the sake of diversifying.

As you will see on this chart, as you move from 1 stock to 8 stocks, you lower the risk substantially. However, from 8 stocks to 900 stocks, it doesn't make too much difference.

http://www.google.co.nz/imgres?um=1&sa=N&biw=1280&bih=619&hl=en&tbm=isch&tbnid=8lb0EotokyEfDM:&imgrefurl=https://www2.blackrock.com/us/defined-contribution/news-insight/investment-insight/target-date-funds-the-essential-guide-to-evaluation-asset-allocation-strategy&docid=3gPTVXmigAL19M&imgurl=https://www2.blackrock.com/content/groups/public/documents/image/diversification-chart.jpg&w=620&h=459&ei=iwquUrnpDoShkgWe24DIBg&zoom=1&iact=rc&page=2&tbnh=142&tbnw=194&start=18&ndsp=23&ved=1t:429,r:23,s:0,i:153&tx=71&ty=44

BIRMANBOY
16-12-2013, 03:07 PM
Well thought out strategy KW....Nice to see.
Here's another slant on things. I have three portfolios. Each one has its own investing/trading strategy and rules. Each serves a different function. The aim of investing is to deliver the outcomes you want, which will vary according to each investors needs/wants. Figure out what you want/need and structure your portfolio(s) accordingly.

Portfolio 1: Income stocks. Good long term solid companies with a history of capital growth, with a dividend yield above the prevailing cost of credit. These stocks are the ones I rely on to deliver an income, regardless of what happens to my capital (ie. through market ups and downs, corrections, crashes, etc). I often reinvest gains from my other portfolio into this one as ultimately I want dividends to provide a fully self sufficient income stream that I can live on comfortably for the rest of my life. There are currently five stocks in this portfolio and I'm always looking for others to add to it as it only comprises 20% of my total capital at the moment.

Portfolio 2: Growth stocks. Stocks I believe have good long term growth prospects, that are all profitable and most of which also pay a dividend. The bulk of my money is in these stocks. And like the experts say, no matter how good you are, you will not be able to pick the outperformers 100% of the time (hey, I'm a SIV holder!) and often the ones that do perform well will be the ones that surprise you. This is because stocks that become market darlings will take off, regardless of whether or not their fundamentals justify it. I have approx 15-20 stocks in this portfolio. They require minimal attention, and I top up when market ructions present good buying opportunities. I sell them if they break their long term uptrend, but otherwise its a buy and hold portfolio and designed to achieve long term capital gains that beat the index (I aim for 15-20% returns a year). 60% of my capital is in this portfolio.

Portfolio 3: Speculative stocks. Stocks I believe that are on the cusp of rerating, have or are about to become cashflow positive and/or profitable, that present a quick trading opportunity etc. There are 10-12 stocks in this portfolio, and with these stocks I expect one or two to outperform, but I have no idea which ones will become hot copper plays, promoted by a newsletter, or purchased by a big investor, or which will discover the "next big thing" etc - whatever it is that will give the stock price wings. I just try to minimise my losses and ride the wave of the stocks that do perform. I have purchased stocks in this portfolio that I think are sure winners, only to see them go nowhere, and have passed up others as not being operationally or financially sound enough, only for those ones to go on to make massive gains. So I agree, can't pick em, don't try, spread your money around and wait to see what flies, then work it. This portfolio is for fun, something for me to do on a daily basis, and is a testing ground for trying out new trading strategies so that I can learn. I have about 20% of my total capital in this portfolio.

Anyone that thinks that holding 30-40 stocks is going to "average or mirror" the index is dreaming - there are around 2,200 stocks on the ASX, so I hold less than 2% of the market. Hopefully the better performing 2% :t_up:

percy
16-12-2013, 08:51 PM
Well thought out strategy KW....Nice to see.

I agree BIRMANBOY,however when I tried to add to KW's reputation,it said I had to add to someone else's.Appears I have commented on KW's reputation too often.!!!!!!!!!

karen1
17-12-2013, 06:40 AM
Here's another slant on things.

Totally agree with percy!

Again, much as in Sparky's post, much of value in your post KW, and another one to be earmarked. Thank you.

Ginger_steps_
22-12-2013, 10:27 AM
Hi KW, opening a separate portfolio in my case does make sense for my speculative stocks. Currently i use ASB- if i were to open another account with another bank is it a simple process to tranfer shares across?
Here's another slant on things. I have three portfolios. Each one has its own investing/trading strategy and rules. Each serves a different function. The aim of investing is to deliver the outcomes you want, which will vary according to each investors needs/wants. Figure out what you want/need and structure your portfolio(s) accordingly.

Portfolio 1: Income stocks. Good long term solid companies with a history of capital growth, with a dividend yield above the prevailing cost of credit. These stocks are the ones I rely on to deliver an income, regardless of what happens to my capital (ie. through market ups and downs, corrections, crashes, etc). I often reinvest gains from my other portfolio into this one as ultimately I want dividends to provide a fully self sufficient income stream that I can live on comfortably for the rest of my life. There are currently five stocks in this portfolio and I'm always looking for others to add to it as it only comprises 20% of my total capital at the moment.

Portfolio 2: Growth stocks. Stocks I believe have good long term growth prospects, that are all profitable and most of which also pay a dividend. The bulk of my money is in these stocks. And like the experts say, no matter how good you are, you will not be able to pick the outperformers 100% of the time (hey, I'm a SIV holder!) and often the ones that do perform well will be the ones that surprise you. This is because stocks that become market darlings will take off, regardless of whether or not their fundamentals justify it. I have approx 15-20 stocks in this portfolio. They require minimal attention, and I top up when market ructions present good buying opportunities. I sell them if they break their long term uptrend, but otherwise its a buy and hold portfolio and designed to achieve long term capital gains that beat the index (I aim for 15-20% returns a year). 60% of my capital is in this portfolio.

Portfolio 3: Speculative stocks. Stocks I believe that are on the cusp of rerating, have or are about to become cashflow positive and/or profitable, that present a quick trading opportunity etc. There are 10-12 stocks in this portfolio, and with these stocks I expect one or two to outperform, but I have no idea which ones will become hot copper plays, promoted by a newsletter, or purchased by a big investor, or which will discover the "next big thing" etc - whatever it is that will give the stock price wings. I just try to minimise my losses and ride the wave of the stocks that do perform. I have purchased stocks in this portfolio that I think are sure winners, only to see them go nowhere, and have passed up others as not being operationally or financially sound enough, only for those ones to go on to make massive gains. So I agree, can't pick em, don't try, spread your money around and wait to see what flies, then work it. This portfolio is for fun, something for me to do on a daily basis, and is a testing ground for trying out new trading strategies so that I can learn. I have about 20% of my total capital in this portfolio.

Anyone that thinks that holding 30-40 stocks is going to "average or mirror" the index is dreaming - there are around 2,200 stocks on the ASX, so I hold less than 2% of the market. Hopefully the better performing 2% :t_up:

Ginger_steps_
22-12-2013, 11:58 PM
Ah ok. I was thinking more along the lines of seperating portfolios into investment/trading in order to avoid paying capital gains tax on all my shares. Not sure if this is even possible with the NZ IRD.... can anyone else help out here? To answer your question, no i probably dont trade enough to qualify for an IB account. Thanks for your input KW

With your spec shares do you trade enough to qualify for a trader account with IB? If not, then its probably not going to make much difference which broker you use, so you might as well keep everything with ASB. I'm not sure how the NZ market works but on the ASX you can transfer CHESS sponsorship of shares to different brokers. Havent tried it myself, someone else might know more.

If its not about brokerage, but simply quarantining spec shares, then just use Yahoo Finance to track each individual portfolio and their performance. The actual broker you use doesnt matter, its more important to keep an eye on each stock and make sure you follow your specified strategy for each one.

Harvey Specter
24-12-2013, 11:17 AM
With your spec shares do you trade enough to qualify for a trader account with IB? .who is IB, or is it just any investment bank like JBWare? What's the commission on a trader account?


Ah ok. I was thinking more along the lines of seperating portfolios into investment/trading in order to avoid paying capital gains tax on all my shares. Not sure if this is even possible with the NZ IRD..there is no tainting with shares so no need for separate portfolios. However, from an evidentiary perspective, I would use something that recorded you intentions at the time you make it and can't be changed (ie. Provided an audit trail). As such, the likes of google finance probably aren't enough as you could change it after the fact without leaving a history. Something like Sharesight that time stamps comments or even use google finance but back up with an email to yourself that is time stamped would also work.

Ginger_steps_
07-01-2014, 01:41 AM
Thanks Harvey and KW - havent checked this thresd for a while with xmas and all - appreciate your thoughts and suggestions.

percy
09-01-2014, 11:43 AM
My 2c worth.

Put no more than 20% of your "invested capital" into one stock, when you know that there is a wonderful growth opportunity that can outperform most other stocks. This is when there is a clear case of price irrationality. Note the use of "invested capital" - I view profits in the portfolio differently to the original capital put in. It is the original capital which I seek to protect.

I ascribe to the Monish Pabrai school of thought which is "Few bets, big bets, infrequently made" (see his excellent book the Dhandho Investor). Pabrai is a disciple of Warren Buffett, and manages the successful Pabrai Funds in the USA. So, for example, I bought up a LOT of Ryman back when they were $2.50-$3.20 (that Ngai Tahu placement was a gift!). But that involved meeting with company people, analysts and visiting Ryman villages around NZ over 2012. So lots of homework to justify the holding. You need to be overweight in your winners for extended periods if you want to make some good money from them.

Or, put it another way, you need to go hard in a couple of stocks when you know the odds are with you. Having 20 different stocks with 5% each is mindless. You would be better to give your money to Milford or Fisher Funds, or buy 4 or 5 ETFs instead. The only way you can get significant portfolio outperformance is by going overweight when you are prepared to risk on the odds you assess. And please don't think I mean "odds" like gambling. Rather, I refer to a considered assessment of price and the likelihood of strong gains over time based on the pricing irrationality you can take advantage of. (Refer Ryman back in early-mid 2012).

Conversely, I don't seek to have lots of little bets everywhere - too hard to manage. My smallest holding is around 2.5% of my portfolio (a US company). My second smallest is a North American ETF of around the same value. I look to top up my smaller holdings on pricing weakness as more capital becomes available. My largest holding is 31.5% of my portfolio, a NZ company. I have 13 holdings at present, but intend to see that increase over 2014 to maybe 15 or 16 if I can find the right plays at the right price. Maybe more if Australia or Europe beckons (I hold no funds in AUD or EUR).

As a rule, I have bigger investments in NZ than in other countries, partly because the NZ story is good, and because I like to visit my investments and talk to the people at those companies. Can't do that with US companies anywhere near as easily.

Obviously, diversification is useful - but don't think of diversification as lots of stocks in a portfolio. Think of it as non-correlation - e.g., owning RYM, DIL, CAV and PEB because retirement stocks aren't linked to SaaS, and biotech isn't linked to slow moving consumer goods like carpets. You don't panic about owning Xero and Summerset, or Auckland Airport and Briscoes. So a good diversified equity portfolio might still have only 5-8 stocks.

Thank you Sparky,Christchurch library is ordering a copy of Dhandho Investor,which I am sure I will learn a lot from..