Myles of Investments

Read about my successes and failures. Learn from my experiences and gain insight without losing any cash!!!

Lesson: Catching a Falling Knife
Lesson: Currency Exchange
Lesson: Mutual Fund
Lesson: Paid to Wait
Lesson: Pricing in a Downturn

This is where you’ll find find my Blog. I will comment on the latest news relating to investing, real estate, and the financial markets.

What to Put into a Stock Market Portfolio

Over the years, I have personally wrestled with what companies to have in a stock market portfolio, and hopefully my experiences can serve as a guide.

First, I believe everyone should have at least some diversification in a stock market portfolio. Please note, that my personal opinions may differ from the salespeople of the investment community. I believe that you should have no more than 10 individual stocks in your portfolio, but that those stocks should not be in direct competition or in the same general industry. Why? Well, why would you want to have the number one maker of widgets along with the number two maker of widgets, when you can just put money into the number one maker of widgets and offset some of your exposure to that investment with others in completely different areas!

Next, look at the types of businesses that you are considering including in your stock market portfolio. You should be investing in areas that a) you know and b) have historically good returns.

Also, I would personally suggest staying away from commodity businesses, unless you know them to be lean and the market leaders. This will free you from the constant attention of following different market sectors to monitor how your stock market portfolio is doing. If you have either no cyclical industry or the best in the business you should not be materially bothered with that industries highs and lows.

A stock market portfolio with few, but diversified quality companies should enable you to have adequate returns with minimal time monitoring them.