How concentrated should you be?

by Tim du Toit

I have been planning an article on portfolio composition and concentration for some time. My portfolio composition to date has been quite simple. It consists of 25 to 30 positions, all more or less equally sized accept for cases where I bought more at a lower price. In spite of studies showing that 15 positions eliminate 80% of company specific risk in a portfolio I arbitrarily chose 25 to 30 positions as I knew my selections were not perfect and I wanted a bit more diversification.I hardly ever have more than 30 positions in my portfolio, as that is the maximum number of companies I can comfortably keep track of.

Confronted with the challenge to distill the secret of sound investment into three words, we venture the motto, Margin of Safety.
Benjamin Graham, Intelligent Investor

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