High growth portfolio and getting donkey deep

[Corporate]

I'm looking for some views on structuring my portfolio. I currently only invest 5-10% of my net worth in any one particular stock. However, the problem is I only ever hold 5 or 6 stocks at one time which means that I'm at most only ever 25%-50% invested in the market.

I don't want to really hold more than 5 or 6 shares at the moment and mainly invest in high risk resource companies. The goal being to earn excess returns in the medium term (i.e 100% in 1-2 years).

What do others do? Is the answer to go donkey deep on 5-6 stocks or look to diversify more.

Thanks in advance.

[Lizard]

So are you wanting to earn 100% on the amount that is in shares or 100% on your total portfolio?

If you are going to make 100% on the amount in shares over 2 years, then you will need to make 41%pa compound.
If you are going to make 100% on your whole portfolio with an average of 33% invested at any one time and the rest earning minimal interest, you will need to make 146% pa compound on your share investments.

Personally, I would say that even the lower amount looks difficult to do for two consecutive years with a portfolio of greater than 5 shares, although it would depend on how many hours you could afford to spend on it and the size of the portfolio - which of course become inter-twined...

A small portfolio split over 5 shares means virtually any volatile micro-cap is accessible, but the $ returns often don't justify the hours that could otherwise be spent in paid employment (even more so if the time could be spent building a future long-term career).

A large portfolio might pay for the time spent analysing and trading, but will tend to push towards ASX200 or, at best, All Ords which will make it very difficult to hit these sort of returns unless the market as a whole is heading that way.

A perpetual dilemma. At some point, aiming for these sorts of returns becomes a career choice. A decision I would say should be taken with caution, as it is only the right one for a few special people or a few special times in life.

[h2so4]

I'd ask myself, "how would I be affected if the 25% - 50% that I have invested suddenly fell by 50%" If a 20% fall scares the crap out of you then I'd stick with 25% - 50% otherwise go donkey deep but with more diversification especially if they are small caps.

[Corporate]

Thanks Lizard and h2so4. You've both given me something to ponder over.

Cheers