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I remember modern portfolio theory used to teach that 10 stocks from
different industry groups is sufficient for to diversify unique risk and get
market returns, and that even 7-8 stocks would suffice. That was 20 years
ago, perhaps someone who is current on academic finance and could comment.
----- Original Message -----
From: "profitok" <profitok@xxxxxxxxxxxxx>
To: <realtraders@xxxxxxxxxxxxxxx>
Cc: <gannsghost@xxxxxxxxxxxxxxx>; "Vincent DONOVAN"
<vdonovan@xxxxxxxxxxxxx>; "Don Thompson" <detomps@xxxxxxxxxxx>; "Dorothy
Carter" <dorothy.carter@xxxxxxxx>
Sent: Saturday, July 20, 2002 8:37 PM
Subject: Re: [RT] GEN: STOCK DIVERSIFICATION--THE 3% SOLUTION
> I would NEVER do that
> Between sep 15 and October 7 be fully invested
> 33% qqq
> 33% spy
> and 33% mdy
> this 3 alone will give you a total of 1000 shares diversification
> Ben
> ----- Original Message -----
> From: "charles meyer" <chmeyer@xxxxxxxx>
> To: "REAL TRADERS" <realtraders@xxxxxxxxxxxxxxx>
> Sent: Saturday, July 20, 2002 7:25 PM
> Subject: [RT] GEN: STOCK DIVERSIFICATION--THE 3% SOLUTION
>
>
> > Group-
> >
> > I've heard from a couple of sources that the optimal method of
> > diversification
> > in a stock portfolio is to have no more than 3% in any single issue. To
> be
> > fully invested would there require owning a total of 33 individual
stocks.
> > Of
> > course the reason cited is that anything can hapen in the way of
earnings
> > surprises to individual issues; but with a total of 33; any price shocks
> > will
> > not adversely affect the total portfolio performance.
> >
> > I'm wondering if there is any type of statistical data; or concept; to
> back
> > up
> > the idea of how the number 33 was arrived at.
> >
> > Thanks for any comments.
> >
> > chas
> >
> >
> >
> >
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> >
> >
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> >
>
>
>
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