The number of stock held in your portfolio is always a debate of discussion. Some like to own a number of stock in small chunks while few like to own few quality stocks. The low number of stocks is always helpful in many aspects. I am slowly getting a pinch of my own choices of multiple stocks that are hitting me badly. I already get few huge losses on stocks, as I fail to keep a track on them. Earlier it happened with DHFL and now I am seeing a similar fate with my "Epigral Limited" holding.
I have a good amount of investment into Epigral Limited. The company from the speculation chemical industry used to be prime holding in my portfolio. The stock price rose sharply ever since I bought it and gave me healthy 300 % plus of return, when it was at its peak. I like this holding, because it was one of my conviction choice and seeing the return I always feel happy. Last 6 month prove to be pretty bad for the Indian stock market. Sometime it rise and some it get fell sharply. Keeping a track of all the stocks in my portfolio gets pretty difficult. I have few good stocks which were in good number and "Epigral" used to be one of them. I barely try to glance on its charts. But yesterday noticing sharp decline in my portfolio value led me to take a closer look on every stock share prices, only to discover Epigral limited falling sharply. From 2000 INR to 900 INR is pretty big slump, that have given me shock of my life. The share price down by more than 50 % and my entire portfolio took a heavy blow. This has resulted in reducing overall portfolio value. What used to be in Green is slowly turning Red just because one share which left out of my radar. I unable to keep a track on all my stocks because of its quantity.
(Source - Google Finance)
A smaller portfolio of 10-12 stocks is easier to track diligently, allowing us to stay on top of company news, earnings, and management changes. Whereas, an optimal portfolio usually holds between 15 to 25 stocks, helps in balancing risk and reward without over diversifying. For most investors, a focused portfolio of 15–25 stocks is ideal to manage risk effectively while leaving room for higher returns. It is significantly easier to stay informed on 15–20 companies than 50+, allowing for faster reactions to news or fundamental changes. After discovering the fall in my portfolio value, I went onto check the reason for downfall, which ultimately leads to poor financial result in last few quarters. Having said that, if I had lessor shares in my portfolio I could have easily tracked them better and remain informed. They were in my radar for all kinds of news and update on it. But tracking every single company in portfolio is not feasible.
This teaches an important lesson that, a smaller portfolio simplifies decision making, reducing stress and allowing for more disciplined investment management. A higher number of stocks in the portfolio may leads to over diversification, which can dilute returns and make it difficult to track investments. Having a lessor quantity is always a mindful approach of investment. A handful of quality stocks is much better for tracing and getting healthy returns.
In good faith - Peace!!
