FINANCIAL CHRONICLE™
Dear Reader,

Registration with the Sri Lanka FINANCIAL CHRONICLE™️ would enable you to enjoy an array of other services such as Member Rankings, User Groups, Own Posts & Profile, Exclusive Research, Live Chat Box etc..

All information contained in this forum is subject to Disclaimer Notice published.


Thank You
FINANCIAL CHRONICLE™️
www.srilankachronicle.com


Join the forum, it's quick and easy

FINANCIAL CHRONICLE™
Dear Reader,

Registration with the Sri Lanka FINANCIAL CHRONICLE™️ would enable you to enjoy an array of other services such as Member Rankings, User Groups, Own Posts & Profile, Exclusive Research, Live Chat Box etc..

All information contained in this forum is subject to Disclaimer Notice published.


Thank You
FINANCIAL CHRONICLE™️
www.srilankachronicle.com
FINANCIAL CHRONICLE™
Would you like to react to this message? Create an account in a few clicks or log in to continue.

Encyclopedia of Latest news, reviews, discussions and analysis of stock market and investment opportunities in Sri Lanka


Submit PostSubmit Post
ශ්‍රී ලංකා මූල්‍ය වංශකථාව - සිංහල
Submit Post



Latest topics

» LANKA ALUMINIUM INDUSTRIES PLC (LALU.N0000)
by Jana Yesterday at 11:41 pm

» No trader can flee from making a mistake. It’s just that you need to be careful about not repeating your mistakes.
by Asoka Samarakone Yesterday at 8:56 pm

» LDEV LDEV LDEV
by stockchaser Yesterday at 8:43 pm

» Daily Foreign Transactions
by Pradeep90 Yesterday at 8:33 pm

» SWISSTEK (CEYLON) PLC (PARQ.N0000)
by Chithi Yesterday at 7:45 pm

» ROYAL CERAMICS PLC (RCL.N0000)
by Jana Yesterday at 6:14 pm

» US dollar trading lower, euro near new high
by target1 Yesterday at 1:38 pm

» LANKEM DEVELOPMENTS PLC (LDEV.N0000)
by Thushara Ayya Yesterday at 11:59 am

» ???? අප්‍රේල් 16 ???? මේ දින 3 කෙටි සතියත් කොළපාටින් අවසන් වුනා
by Wickyz Yesterday at 11:20 am

» DIPD/HAYC/HAYL
by Wickyz Yesterday at 11:19 am

» RAIGAM WAYAMBA SALTERNS PLC (RWSL.N0000)
by Eranga87 Sun Apr 18, 2021 4:12 pm

» GLAS will be winner with Super Gain.
by ronstyn53 Sat Apr 17, 2021 10:22 pm

» CIC HOLDINGS PLC (CIC.N0000)
by abey Sat Apr 17, 2021 9:07 pm

» First capital holdings CFVF.N0000
by invest thinker Sat Apr 17, 2021 4:46 pm

» Lanka Walltile PLC Investment Case
by judecroos Sat Apr 17, 2021 8:55 am

» Which is the best at current market condition ? ( At least 30% within 30 Days)
by judecroos Sat Apr 17, 2021 8:39 am

» Big opportunity in Kegalle Plantations
by EquityChamp Fri Apr 16, 2021 2:58 pm

» විජේදාසගේ... voice cut ප්‍රතිඵල
by nigma Fri Apr 16, 2021 11:59 am

» If you buy a stock that’s not going up in price, you won’t make any money. STOCK market for beginners
by dayandacool Fri Apr 16, 2021 11:31 am

» B P P L HOLDINGS PLC (BPPL.N0000)
by vikiperera Fri Apr 16, 2021 11:17 am

EXPERT CHRONICLE™

ECONOMIC CHRONICLE

GROSS DOMESTIC PRODUCT (GDP)


CHRONICLE™ YouTube

CHRONICLE™ NEWS PRODUCTS

FINANCIAL CHRONICLE™

Views & Reviews, Analysis, Evaluations, Discussions, Gossip and Hot Tips relating to Sri Lankan companies listed on the Colombo Stock Exchange (CSE)
Contribute




DAILY CHRONICLE™

Latest news and articles published in Newspapers, Websites, Blogs and other online news sites relating to business and investments in Sri Lanka
Contribute



ECONOMIC CHRONICLE™

This is a section that provide news, views, analysis, predications relating to Political and Socio-Economic factors and how such activities affect the Stock Market and other economic activity of the Country.

Contribute




EXPERT CHRONICLE™

This is an exclusive section for Expert Articles which will help member to share knowledge through comments and responses of the members. All members are allowed to reply and make comments to these articles.

Contribute


Submit Post


CHRONICLE™ YouTube

Youtube Videos and other visual presentations relating Stock market and other investment advise submitted by members or other contributors.

Contribute


Submit Post


කොළඔ කොටස් වෙළඳපොළේ වංශකථාව
කොළඔ කොටස් වෙළඳපොළේ ලැයිස්තුගත සමාගම් කොටස් ගැන තොරතුරු¸විශ්ලේෂණ¸සාකච්ඡා¸ කටකතා¸රසකතා යන සියල්ල අපේම සිංහලෙන් කතා කළ හැකි ‘කතා මණ්ඩපය’

Contribute

Twitter Feeds
POPULAR COMPANIES
A

ABANS ELECTRICALS PLC

ACCESS ENGINEERING PLC Hot

ACL CABLES PLC

ACL PLASTICS PLC

ACME PRINTING & PACKAGING PLC

AGSTAR PLC

AITKEN SPENCE HOTEL HOLDINGS PLC

AITKEN SPENCE PLC

ANILANA HOTELS AND PROPERTIES PLC

ARPICO INSURANCE PLC

ASIA ASSET FINANCE PLC

ASIA CAPITAL PLC

B

BAIRAHA FARMS PLC

BALANGODA PLANTATIONS PLC

BIMPUTH FINANCE PLC

BLUE DIAMONDS JEWELLERY WORLDWIDE PLC

B P P L HOLDINGS PLC

BROWNS BEACH HOTELS PLC

BROWNS INVESTMENTS PLC

C

CARGO BOAT DEVELOPMENT COMPANY PLC

CENTRAL INDUSTRIES PLC

CEYLON COLD STORES PLC

CEYLON GRAIN ELEVATORS PLC Hot

CEYLON TEA BROKERS PLC

CEYLON TOBACCO COMPANY PLC

CHEVRON LUBRICANTS LANKA PLC

COLOMBO FORT LAND & BUILDING PLC

COMMERCIAL BANK OF CEYLON PLC

CITRUS LEISURE PLC Hot

COMMERCIAL CREDIT AND FINANCE PLC

D

DANKOTUWA PORCELAIN PLC

DFCC BANK PLC

DIALOG AXIATA PLC

DIALOG FINANCE PLC

DIPPED PRODUCTS PLC

DISTILLERIES COMPANY OF SRI LANKA PLC

DUNAMIS CAPITAL PLC

E

EAST WEST PROPERTIES PLC Hot

EASTERN MERCHANTS PLC

EXPOLANKA HOLDINGS PLC

E-CHANNELLING PLC

F

FIRST CAPITAL HOLDINGS PLC

G

GALADARI HOTELS (LANKA) PLC

GUARDIAN CAPITAL PARTNERS PLC

H

HATTON NATIONAL BANK PLC

HAYLEYS PLC

HAYLEYS FABRIC PLC

HAYLEYS FIBRE PLC Hot

HEMAS HOLDINGS PLC

HIKKADUWA BEACH RESORT PLC

HNB ASSURANCE PLC

HVA FOODS PLC

J

JANASHAKTHI INSURANCE COMPANY PLC

JOHN KEELLS HOLDINGS PLC Hot

JOHN KEELLS HOTELS PLC

L

LANKA ASHOK LEYLAND PLC

LANKA IOC PLC

LANKEM CEYLON PLC

LANKEM DEVELOPMENTS PLC

LAUGFS GAS PLC

LAUGFS POWER LIMITED

LOLC FINANCE PLC

LOLC HOLDINGS PLC

LUCKY LANKA MILK PROCESSING COMPANY PLC

M

MELSTACORP PLC

N

NATIONAL DEVELOPMENT BANK PLC

NATION LANKA FINANCE PLC

NESTLE LANKA PLC

O

ORIENT FINANCE PLC

OVERSEAS REALTY (CEYLON) PLC

P

PANASIAN POWER PLC

PEOPLE'S LEASING & FINANCE PLC

PIRAMAL GLASS CEYLON PLC

PRIME FINANCE PLC

R

RAIGAM WAYAMBA SALTERNS PLC

RENUKA AGRI FOODS PLC

RENUKA CAPITAL PLC

RENUKA HOLDINGS PLC

RICHARD PIERIS AND COMPANY PLC

RICHARD PIERIS EXPORTS PLC Hot

ROYAL CERAMICS PLC

S

SAMPATH BANK PLC

SEYLAN BANK PLC

SIERRA CABLES PLC

SINGHE HOSPITALS PLC Hot

SMB LEASING PLC

SOFTLOGIC HOLDINGS PLC

SOFTLOGIC LIFE INSURANCE PLC

SRI LANKA TELECOM PLC

SWISSTEK (CEYLON) PLC Hot

T

TEEJAY LANKA PLC

TESS AGRO PLC

THREE ACRE FARMS PLC

TOKYO CEMENT COMPANY (LANKA) PLC Hot

U

UNION BANK OF COLOMBO PLC

V

VALLIBEL FINANCE PLC

VALLIBEL ONE PLC Hot

VALLIBEL POWER ERATHNA PLC

W

WASKADUWA BEACH RESORT PLC


You are not connected. Please login or register

FINANCIAL CHRONICLE™ » FINANCIAL CHRONICLE™ » How many shares should you have in your portfolio?

How many shares should you have in your portfolio?

Go down  Message [Page 1 of 1]

gamakak


Stock Analytic
Stock Analytic

How diversification works

We’ve written about diversification and asset allocation before. But here’s a quick recap.

Investing is risky. No investment is truly ‘risk-free’. But risk comes in different forms.

For example, if you buy a share in Tesco, you are betting on the quality of the company itself. If the company runs into trouble, the shares will probably fall. So you are taking ‘company’ risk.

But you are also betting on the supermarket business. If supermarkets as a sector start to fall out of favour – if the internet destroys their margins, say – then Tesco is likely to suffer too. This is ‘sector’ or ‘industry’ risk.

Taking an even wider view, there’s ‘market’ risk. Maybe investors just don’t want to buy British-listed stocks, or shun equities altogether.

Diversification can help combat all of these risks. By buying more than one supermarket company, you could reduce company risk. By buying a business in a different industry too – technology maybe – you could reduce your sector risk.

And you could reduce market risk by investing some of your money in stocks listed in another country, or even in a different asset class, such as bonds.

How well does it work?

This is the theory behind diversification, and – unlike many clever-sounding ideas - in practice it has been shown to work. A 1977 study by academics Edwin J Elton and Martin J Gruber showed how even a little bit of diversification could cut your risk.

It found that the average standard deviation of a US share over a year was 49.3%. That sounds technical. What it basically means is that roughly a third of the time, you could expect the average US share to be 50% higher or 50% lower than the point at which you bought it. Very nice if you’re up 50% - not so nice if you’re down that much.

But if you bought another share, the standard deviation of the portfolio would fall to 37.4%. Having ten shares would cut this to 24%. Diversifying across asset classes, and across countries also helps.
How much is too much?

But you can have too much diversification. If you have 100 shares instead of ten, for example, that’s 100 sets of dealing costs.

Unless you have a very large amount of money invested, that’s going to be very expensive as a percentage of your portfolio. In other words, holding that many stocks is effectively impossible for a retail investor.

So what’s the optimum amount? The good news is that Elton and Gruber found that moving from a 20 to a 1,000-share portfolio would only cut risk from 21.7% to 19.2%. So you don’t need to have a ridiculously large portfolio to be properly diversified.

Many of the best investors run fairly tight portfolios. Hedge fund manager Seth Klarman holds only 22 shares in his US portfolio. He thinks the ideal number is even lower at just 15. An Australian study in 2006 also found that households with the most focused portfolios tend to do better than those who spread themselves thinner.

This makes sense. The fact is, investing is hard work. No one with a 100-stock portfolio can possibly know every one of those companies well enough to be making properly informed decisions about them.

The best level of diversification does depend partly on the sector you plan to invest in. Someone buying into a specialist, high-risk sector where lots of companies go bust, such as biotech or small miners, will want to buy enough shares to ensure their winners more than offset their many losers. This is where a fund can come in very useful.

But for a more straightforward portfolio – such as large, income stocks, say – then an investor should be able to build their own diversified portfolio easily and cheaply enough, with around 16 to 20 stocks.


Taken from
http://www.moneyweek.com/investment-advice/how-to-invest/getting-started/basics-how-many-shares-should-you-have-in-your-portfolio-61409?utm_source=newsletter&utm_medium=email&utm_campaign=Money%2BMorning

Redbulls

Redbulls
Director - Equity Analytics
Director - Equity Analytics
Thanks lot mate.

Sidath

Sidath
Manager - Equity Analytics
Manager - Equity Analytics
Studies have shown that 12 to 18 stocks are where diversification is at a maximum, addition of further stocks does not amount to a commensurate reduction in risk.

I cannot give u a source for this, but read it in some books while in uni.

traderathome

traderathome
Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
for me it depends on how much money you got to invest 2million investment ideal would be 5-6.


regards

UAEBOY

UAEBOY
Senior Manager - Equity Analytics
Senior Manager - Equity Analytics
If you can invest on 20 shares or more in the market ,you can diversified away the systematic risk(market risk)... Smile
But you can not escape from bussiness risk, you have to face it.... Mad

nimantha80


Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
zero Very Happy,some here will go from hero to zero in December.

Sasanka De Silva

Sasanka De Silva
Manager - Equity Analytics
Manager - Equity Analytics
Yes, I would agree.
Otherwise, the fate of the money who wanted to grab as many as it could would befallen on the investor too. Very Happy
@traderathome wrote:for me it depends on how much money you got to invest 2million investment ideal would be 5-6.regards

traderathome

traderathome
Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
@UAEBOY wrote:If you can invest on 20 shares or more in the market ,you can diversified away the systematic risk(market risk)... Smile
But you can not escape from bussiness risk, you have to face it.... Mad
with all due respect let me add ...a broader diversification would take us to forex trading,commodities (Oil/Gold,Silver, Sugar),bonds...other equity markets in developed & emerging markets plus option trading.....

Rolling Eyes
TAH

traderathome

traderathome
Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
@Sasanka De Silva wrote:Yes, I would agree.
Otherwise, the fate of the money who wanted to grab as many as it could would befallen on the investor too. Very Happy
@traderathome wrote:for me it depends on how much money you got to invest 2million investment ideal would be 5-6.regards
i am having 20 in my PF ... Laughing it does not mean i got 8-10Million Sad

TAH Wink

Slstock

Slstock
Director - Equity Analytics
Director - Equity Analytics
@nimantha80 wrote:zero Very Happy,some here will go from hero to zero in December.

I think you view on December dull period is clear. But what about January /FEb then? Still Zero?

nimantha80


Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
@slstock wrote:
@nimantha80 wrote:zero Very Happy,some here will go from hero to zero in December.

I think you view on December dull period is clear. But what about January /FEb then? Still Zero?
Was the market dull in December 2010 or was the market green on January/ Feb 2012?No. So better be zero.Only after the cycle of interest rates and inflation change,then cse will be good.

traderathome

traderathome
Senior Vice President - Equity Analytics
Senior Vice President - Equity Analytics
interest change has to be brought down......for sure and surely something will be done on next meeting with the parties in concern... Very Happy

most brokers will surely push for this...rate to come down at least by some basispoints..

TAH

Sidath

Sidath
Manager - Equity Analytics
Manager - Equity Analytics
@UAEBOY wrote:If you can invest on 20 shares or more in the market ,you can diversified away the systematic risk(market risk)... Smile

studies have shown that after 18 shares, there is no incremental decrease in risk, or increase in diversification.

Sponsored content


Back to top  Message [Page 1 of 1]

Permissions in this forum:
You cannot reply to topics in this forum