Thursday, December 22, 2016

Portfolio Size

I started this entry because of a question from a reader.

In connection with portfolio size the quick answer is to go with what you are comfortable with. Also, you need to be able to track your stock. You need to review all your stocks at least once a year. Some stocks you might want to review more often if they are cyclical or volatile. I have 50 that I own, but I track 150 stocks. I can do this quite comfortably at the present time.

Most analysts and people who talk about portfolio size feel that around 20 stocks that are diversified is the right size portfolio.

You are going to have losers. These are the ones you will lose money on. You may not lose all your money, but could lose 50% to 90% of a stock's value. A recent stock going off the rails that comes to mind is TransAlta Corp. (TSX-TA). The initial drop was around 50%. It is now down some 84% since its top in August 2008.

Part of the reason I have 50 stocks is that I opened Trading Accounts at different times. I got my trading account first, then an RRSP account, then a US account, then a Locked-In RRSP account and finally my TFSA. There is some overlap, but I could not have complete overlap because stocks I liked were not at reasonable prices when I need to do some buying. I feel that it is more important to pay a reasonable price for your stocks. If you overpay for a stock at the start you could do poorly with it over the long term even with a great stock.

One question to ask yourself about your portfolio is, can I go off and leave it and not worry? Can I leave my portfolio alone for a month or 6 months and not worry? I can. I feel that nothing much will happen to it in the long term.

However, problems in the short term are a different matter. You should not be worried about your investment in the short term or you got the wrong things in your portfolio. It is not that I do not indulge in short term investments. I do because it is fun and I do not do it with enough money to damage my portfolio.

I remember talking to an acquaintance I know when the market was crashing at the end of 2008. She said that she had taken 2 days off of work to sell stuff from her portfolio. She lost a lot of money. To me the crash was just been there done that time to focus on something else.

You may want to focus on dividend payments, not value of your portfolio. The last two bear markets I lost just over 30% of the value of my portfolio. However, my dividend income did not decline. Since I have mostly great stocks the value of my portfolio recovered quite nicely.

I sold nothing because of the crash. I wrote about this a number of times. The first entry compared my portfolio to the TSX in Recovery from Bears where I looked to see how well my portfolio recovered from bear markets. I wrote about Me and CDZ on how my portfolio compared to the Dividend Aristocrat Index ETF of CDZ. I also wrote I about my Bear Market Income.

On my other blog I wrote yesterday about FirstService Corp (TSX-FSV, NASDAQ-FSV)... report learn more. Tomorrow, I will write about Colliers International Group Inc. (TSX-CIGI, NASDAQ-CIGI)... learn more on Friday, December 23, 2016 around 5 pm.

This blog is meant for educational purposes only, and is not to provide investment advice. Before making any investment decision, you should always do your own research or consult an investment professional. I do research for my own edification and I am willing to share. I write what I think and I may or may not be correct.

See my site for an index to these blog entries and for stocks followed. I have three blogs. The first talks only about specific stocks and is called Investment Talk. The second one contains information on mostly investing and is called Investing Economics Mostly. My last blog is for my book reviews and it is called Non-Fiction Mostly. Follow me on Twitter.


  1. Hi Susan ,
    Once again an excellent article !
    I really learned a lot by reading your blogs .
    Season's greetings and a happy new year !


  2. Thank You and enjoy the holiday season.