A good portfolio...

Just want to hear a few opinions on what makes a good diversified portfolio with an attractive and consistent return rate?
What's is an optimal number or securities to hold in?
Should you have securities from all different industries?
The major things that one should keen an eye on once established your portfolio?
etc...

A diversified portfolio contains investments that are inversely correlated.
An optimal number of securities in a diversified portfolio has been demonstrated to be around 12 -15.

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Originally Posted by peat

A diversified portfolio contains investments that are inversely correlated.
An optimal number of securities in a diversified portfolio has been demonstrated to be around 12 -15.

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Depending on how much you are investing 12-15 maybe too many . You will have small parcels , no economy of scale and a finger in every pie , but a handful of nothing .

Maybe look at managed funds ?

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Originally Posted by peat

A diversified portfolio contains investments that are inversely correlated.
An optimal number of securities in a diversified portfolio has been demonstrated to be around 12 -15.

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I say an optimal number of securities depends on quite a few variables, and even then is still subjective.
Some of these variables that spring to mind (in no particular order) are:

- How much time you have to spend to read, absorb, and analyse
- Your appetite for risk
- Your age
- Your buy/sell behaviour (trader vs investing)
- Size of your portfolio in monetary terms
- Your equity in your portfolio
- How much you can afford to lose without going bankrupt
- Whether or not you are leveraging
- Your level of experience in the stockmarket
- Your knowledge about the company(s) and sector(s) you invest in
- The volatility of the company(s) and sector(s) you invest in
- Your intended time in the sharemarket (short-term, long-term, indefinite)
- The strength of your convictions
- Your future aspirations requiring time or money

Taking into account the above for me, the number of companies in my portfolio to-date has always been from 4 to 7 inclusive.
Not diversifying will reduce risk but with reduced risk comes reduced reward
Leveraging will amplify the result. ie Loss = bigger loss, Gain = bigger gain.

Too many eggs in too many baskets means one can't keep track of all the eggs in all the baskets.
I like to have a few eggs in a few well researched baskets. This enables me to keep a very close eye on them.

I started with 6 companies...different sectors...healthcare, bank, tech, infrastructure, food n 1 high risk one(any) but not too much invested..every 6months u review whether to keep or to swap...like I just recently swap my transportation sector to education sector....make sure u spread it out so when one sector got hit, others still cover...good luck...