NUMBER OF PORTFOLIO LINES

[kienast]

Good morning !

I was wondering if it was better to have a portfolio of, for example, 5 lines with large amounts on each line or 15 lines with smaller amounts.

And in either case, what would be the impact on the future growth of this same portfolio? 

THANKS

K

[DSwissK]

I think it's better to diversify a minimum. And five "lines" is in my opinion a little short... 

 

On the other hand, it depends on the amount you have available because the costs per “line” are to be counted as a pure loss. 

 

For your second question, it mostly depends on what you decided to buy to fill those "lines"... It's hard to be more specific. Theoretically, the more you buy, the closer you will be to the average market performance. 

[Jerome]

This is the eternal question, which opposes the disciples of Benjamin Graham and those of Warren Buffett.

Personally, I don't consider myself good enough to concentrate risk on just a few positions like Buffett. And then you also have to have a lot of risk tolerance if the portfolio has few positions, because a big variation in one of them has an immediate impact on the performance of the whole.

Some say that having a very diversified portfolio with a lot of positions takes a lot of time to follow. I retort that it is the opposite. With few positions, I would be so afraid of each of my lines that I would analyze them constantly, I would follow the price movements every day, I would freak out at the slightest bad news, I would read the financial reports from A to Z… By diversifying, I focus on a few specific criteria that I know well and I apply them to all my values. I do not need to dwell on each line because even a significant drop would have little impact on the overall performance. 

On the contrary, it is true that the more titles you have, the more in theory the chances of doing better than the market diminish. But frankly, I gave up on this idea a long time ago, because very few people manage to do it over time (apart from geniuses like Buffett). And my performance has never been as good as since I stopped wanting to beat the market... It is indeed better to concentrate on your principles, your methods and keep discipline, rather than focusing on what others are doing.

Finally, and as DSwissK said, it is true that having a lot of positions costs a lot in fees. So it is necessary to invest large amounts, which is not necessarily possible at the beginning. So there is a phase where it is necessary to start with a portfolio that only has a few lines anyway.

[kienast]

Thank you for your answers! It is true that by doing a quick "rough" calculation, to generate a monthly income of 500 euros in dividends net of all deductions you need to have roughly a global portfolio of 150,000 euros... still! 

 

My portfolio is under construction: BAT – UNIBAIL – AZN 

 

The next values that will be integrated will be purely US values, I specify that everything is stored through a CTO+PEA. 

 

THANK YOU AGAIN FOR YOUR ANSWERS!

[DSwissK]

kienast said
Thank you for your answers! It is true that by doing a quick "rough" calculation, to generate a monthly income of 500 euros in dividends net of all deductions you need to have roughly a global portfolio of 150,000 euros... still!

And there you calculate with an average Yield of 4% which seems rather high to me… On the other hand you forget the magic of reinvested dividends which allows you to achieve your goals more quickly. 

[kienast]

THANK YOU !

 

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