Re: [RT] GEN: STOCK DIVERSIFICATION--THE 3% SOLUTION

["charles meyer" <chmeyer@xxxxxxxx>]

Lenny-
 
Thanks to you and Ben too!  I didn't mean to imply that 
one would be 100% fully invested
or buy and hold the whole time.  Sorry.  It was just 
the idea that one should have a
maximum of 3% in any individual stock; given a 100% invested 
position.  Great ideas you've
got though....
 
chas 
<BLOCKQUOTE 
style="BORDER-LEFT: #000000 2px solid; MARGIN-LEFT: 5px; MARGIN-RIGHT: 0px; PADDING-LEFT: 5px; PADDING-RIGHT: 0px">
  ----- Original Message ----- 
  <DIV 
  style="BACKGROUND: #e4e4e4; FONT: 10pt arial; font-color: black">From: 
  rosow@xxxxxxx 
  To: <A 
  href="mailto:realtraders@xxxxxxxxxxxxxxx"; 
  title=realtraders@xxxxxxxxxxxxxxx>realtraders@xxxxxxxxxxxxxxx 
  Sent: Saturday, July 20, 2002 8:44 
  PM
  Subject: Re: [RT] GEN: STOCK 
  DIVERSIFICATION--THE 3% SOLUTION
  <FONT face="Arial Rounded MT Bold" 
  lang=0 size=2 FAMILY="SANSSERIF">In a message dated 7/20/2002 7:27:59 PM 
  Eastern Daylight Time, chmeyer@xxxxxxxx 
  writes: <FONT color=#000000 face=Arial lang=0 size=2 
  FAMILY="SANSSERIF">
  <BLOCKQUOTE 
  style="BORDER-LEFT: #0000ff 2px solid; MARGIN-LEFT: 5px; MARGIN-RIGHT: 0px; PADDING-LEFT: 5px" 
  TYPE="CITE">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. <FONT 
  color=#000000 face="Arial Rounded MT Bold" lang=0 size=2 
  FAMILY="SANSSERIF">Chas,     I would take this one 
  step further and look at the overall market from a top/down approach. Rather 
  than be invested at 100% at all times I would look at the health of the 
  market. Each individual would have to come up with their own way of evaluating 
  the market strength.  Let's say for instance that you are only talking 
  about long trades. For example, through your methods, on a  scale of 1 - 
  10, you rate the overall market as a 3. Keeping the same concept of only being 
  invested in 3% of your total pie on any one issue, I would only hold 10 stocks 
  vs. your 33 and keep the rest in cash. Those 10 stocks would be dispersed in 
  at least 3 sectors which would be picked first through sector analysis and 
  then through TA analysis. Just another thought! Lenny 
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