Thoughts on Charlie munger saying you only need 3 stocks in a portfolio. How many stocks are in your portfolio?

  1. Munger and Buffet have said that diversification is necessary only if you don't know what you're doing. By their standards, 99% of us don't know what we're doing so we should definitely diversify. What makes Munger and Buffet "know what they're doing"? It's an obsessive amount of research into companies of interest, the patience to only buy with a significant margin of safety, and the discipline to not buy into hype or companies they don't understand. Also fair to say that there is some luck thrown into the mix!

  2. I mean, WB bought IBM over Amazon or Google. 😂They only got him into Apple after much cajoling. It’s clear we all have limits to our ‘circle of competence,’ experts included. Diversify.

  3. Don't forget that they can inspect a company in all its details. When they call everyone knows who they are. If you call asking for a company tour you'll probably get laughed at.

  4. Warren Buffet once said “It’s okay to put all your eggs in one basket. You just have to watch that basket very closely.”

  5. Dude..look up blue chip stocks and park some assets there. Also, after Xmas park some cash in 3mo bonds.

  6. If there was a single company on earth that had more shares taken out of street name amongst hundreds of thousands of its investors, I would go all in with them...since there isn’t I’ll continue to load up on that stock that starts with a g.

  7. I cannot imagine that being a good investment strategy. 3 indexes, yeah that makes sense. Equity instruments have 2 components of risk: systemic and company specific. I won't elaborate but here are 2 examples off the top of my head. You own 3 stocks a few years ago: Kraft Heinz, Wells Fargo, and something unrelated, some tech or healthcare stock.

  8. Warren buffet went all in on cococola and diversified later. Why bet on a bunch of small wins when you’re more confident in a big one?

  9. Sometimes there isn’t a huge difference between an index and an actual stock. Say you had Apple, Xom and WFC. Would that be really much worse than SPY, XLE and XLF?

  10. I bought citibank in early 2007, one of if not the biggest blue chip bank at the time. By 2008 it lost 90%. Eventually sold. Has never recovered. Similar experiences with Ford, Phizer, and Unilever.

  11. Then why even bother coming to this sub? You clearly have no genuine interest in the market or how it functions

  12. 100, randomly selected. It’s my own little experiment at replicating an equally weighted total market index. I enjoy tracking it and balancing the positions. It’s up 1.5% over 1 year while SPY is down 15%.

  13. I mean 3 solid companies are good that are probably never gonna go away such as KO, PEP, and maybe idk MSFT, JPM, O, it's really up to you. I personally have like 12 at the moment, maybe I'll add more maybe I'll subtract in the future. Depends on what your interest are and your views on the company I guess. Can be more than that or less, your money so your choice.

  14. I have 4 stocks and two ETFs in my brokerage and Roth IRA. Two stocks are big financials (BLK & CG) Other two are a tech company (IAC) and a smaller financial (SOFI). BLK is my largest position by far. 50% of portfolio. Ive been buying a lot of it lately since it’s down so much. I’m down big in SOFI and CG. IAC is a small position. I’m long all the stocks.

  15. My rule is, only have as many stocks as you can keep track of and memorize the vital stats of. You should always know all the dividend info, when the distribution dates are, when the companies report earnings, PE ratios, average trading volume, moving averages, relative performance etc... It's different for everyone. If you're really busy and can't spend very much time on your portfolio, you should probably own fewer stocks. Investing is pretty much what I do full time and I'm pretty comfortable with 20 to 30 individual names and a few ETF's. When the market is in turmoil and you have to make a lot of quick decisions, you WILL make mistakes if you have too many stocks. You should also memorize how many shares you own, when you bought them, how much you paid for them and how big your positions are, what prices you're willing to buy at, what price you want to sell at so when things get crazy, you'll know exactly what to do and you won't panic or freeze up.

  16. He said 3 ringers. That's old-timey speak for 3 sure bets. It's couched on the principle that you understand what you're buying, and you aren't going to vomit when the roller coaster does what roller coasters do.

  17. Buy 3 stocks and learn how to sell premium against position in good and bad times. Easy to mange 3 stocks and collect premiums. I have 15 stocks in my port, but 3 are major players and I am constantly hedged and selling premium on them. Watching, trimming, and adjusting hedges on more than 3 becomes a full time job.

  18. I own only 2M shares of LOVE.V, nothing more needed, they are the only profitable cannabis company with a future, enough to take up all the space in my portfolio hehe

  19. I try to mantain a 3-6 weight in each stock. Less than 3 is really not worth the effort, more than 6 becomes a more concentrated risk. (I manage friends and family money so im pretty risk adverse)

  20. I have 1 stock, 1 ETF, and a couple passive index funds. Most of my gains have come from the single stock but I’m a fan of diversification and there’s no better way to do that than the Nasdaq and S&P500.

  21. He’s right. Out of all my stock picks…if I had to force myself to just pick 3 of those, that would have given me the best return. Those 3 are my biggest gainers.

  22. Ask him how many he has in his portfolio. If that is 3, let's talk. Kidding aside, even the most sophisticated technical minds don't fully know exactly what they're doing. A LOT of successful investing is LUCK. At any rate, I think for the average everyday investor, 3 individual stocks is impractical to expect serious returns from unless those are well established big names or if the investor has some information asymmetry advantage. 3 ETF is still doable. But 3 stocks...naaah.

  23. I love the bullshit they try and push when they do the exact opposite. Did they get rich via Berkshire by only owning 3 stocks. Fuck no!

  24. 4 for me in Canada. Cibc, boardwalk REIT, Loblaws and Bell. All have good dividends and are holding well through the early recession. I have us market ETFs in my rrsp. But that’s is all I have in my TFSA and so far so good.

  25. I have like 35 stocks in my portfolio. Some may say I am over diversified and I should just buy a etf but that’s no fun lol 😂. I enjoy watching and keeping up with the companies in my portfolio.

  26. Well if you do the kinda research into a company him and buffet likely do that makes sense. Cause if your portfolio is to diverse I think it's gonna be hard to beat the market.

  27. Fck those guys. They have it easy way. Whatever they buy been publicated in all nees and media . After when ppl see what they bought they buy too and stocks go up. This some bs how they make them richer

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