” Obsession with broad diversification is the sure road to mediocrity “-John Neff
Bob Scless says, “When it comes to investing, I’d rather own a few pieces of something that is of quality, pays more, and can be monitored more closely than to own a little piece of everything. In today’s unstable market, there’s a lot of money to be made by being an active investor. By owning between 3 to 5 companies at a time that are well established leaders in their industry, you’ll have opportunities to reinvest in them when a major dip occurs. People tout index funds and passive investing because they supposedly mitigate risk and those who don’t have the time to follow the market can still be invested, But factoring in the lower returns for the passive investor, those advantages take a hit. Plus, diversification doesn’t offer you protection from risk when the stock market has a day like it did on Thursday. Just ask yourself, are you better off by owning a larger basket of averageness or a smaller basket of greatness?”
I myself try to have 5% each in 20 stocks I follow very closely. All of them pay pretty good dividends. I do not care if they grow stock price very much. I stay away from FANG stocks like the plague. Buy on dips. Rinse, repeat.