I received a very good comment and few questions in response to my dissusion post about number of stocks in a long term portfolio. I already provided my views in the comment section which, most likely, will get buried in archives. Other readers may not be able to read it. So I enhanced my response and posting it here. The comment that I received is reproduced below in italics.
Pl. do not limit by numbers for a successful portfolio. In our this website itself, it is recommended 5 long term stocks like NTPC, ONGC etc. I am surprised SBI and Reliance are not there. These two gaints figure in top 10 in the world itself. As and when you find a growth story of companies like Bharti airtel, (they grow vertical and horizontal also gradually). It should find a place in our portfolio. Then do not forget to profit from stock markets ups and downs. This is apart from long term portfolio. To get regular monthly income for people like retirees, Options and futures, Commodities also do not ignore. With a little study, there is money to make. Share your ideas and reactions, please. [Please note: I removed the name for privacy]
There are two questions that will always haunt any long term investor. One is about what is a right asset allocation, and second is how many stocks one needs in a long term portfolio. I do not think there is any boiler plate type of answer to these questions. I believe while it is absolutely necessary to have an optimum asset allocation and multiple number of stocks, the actual percentage allocation or number of stocks will depend upon individuals risk profile, willing to learn, willing to spend time reading about companies, etc. In addition, these two aspects cannot be generalized and it cannot be a static numbers. These have to be dynamic and should change with the investing time period. Having said that following is my thought process for my long term portfolio.
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