How to diversify

I am currently holing 14 positions over health, tech, mining, cars, finance, industrials and entertainment. I also have a position in crypto that I am speculating for the long game.

I got out of a global etf but do intend to get back in with a lump at some point.

Agree with @Rat_au_van I sometimes get carried away when researching new stocks and don’t want to miss out :face_with_monocle:

I think you’re right. It’s a concentration, not a diversification. And yes, I’m being 100% stock. I don’t normally think about investing in ETFs because I prefer to invest in companies that I can keep up with their growths. However, investing in an index track is something I was thinking of doing :+1:

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Where is this data from?

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Some thoughts

I’ve hear lots of people throw numbers around in that range, so it really depends exactly when you look, but I think it would be a very similar story for most major regions/periods. You can replicate it very easily to check an exact scenario, just pick a stock universe and a time period and count how many stocks it takes to make up the return.

Here’s the US market for 2010-2020 as an arbitrary example:

If you look at total capitalisation in the US it has grown by about 19tn or ~110% from 2010 to 2020

You would have got ~30% from government bonds of the same period, so where did the extra 80% (14T) return come from?

Just look at the top performers, during this time the top 25 stocks returned over 8.5 Trillion of growth! and we only need to add up about 100 stocks to get that 14T return out of around 4000 listed for the period.

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Usual great, thoughtful stuff from Howard Marks

Remember, if you over diversify and have too many individual companies in your portfolio, you might as well just buy a world tracker.

Simpler, cheaper and less time consuming (but also a bit boring).