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Why This Investor Owns More Than 100 Stocks

By Brian Withers and Jason Hall - Jan 30, 2021 at 7:30AM

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This investing approach may help you sleep better.

Take a look at two successful investors' portfolios and you would be surprised how different they are. One of the key differences is likely the number of stocks they own. Beginning investors (and even experienced ones) may not know what's best for them. This isn't a one-size-fits-all answer. Every investor has different circumstances. The "right" number of holdings for you can vary based on your age, your time available for stock research, your temperament, and of course, your investing style. In this video clip from Fool Live, recorded Jan. 14, Fool.com contributor Jason Hall explains the key reasons why he owns over 100 stocks in his portfolio. 

Jason Hall: It's good stuff, and here's the bottom line. Brian talked a little bit about his situation. He's semi-retired, so he's able to focus more heavily on portfolio management. He's 10 years older than me, nine years. I just turned 44 in December. I have a 3-year-old who turns four later this month. My wife works a very, very busy job, so a lot more important. As much as I think my job is important and being able to help so many thousands of people invest better is important, my wife works in healthcare and she's actually helping develop treatments for COVID.

Brian Withers: Yeah, that's exciting.

Hall: So we prioritize her work time and prioritize me having flexibility for our child. I just simply don't have the time to focus on every single company that I want to own. Here's my strategy and here's how it's different. One thing I can do here, I'm going to go ahead and pull up the link to it, to my Fool.com profile. It has a list of every single ticker that I own. I didn't count them up before this show because it actually has changed a little bit over the past, let's just say since the beginning of the year, because I have done a little bit of trimming of some weeds. I sold Under Armour. I finally completely exited Under Armour not too long ago, one that you mentioned. So that's two last tickers that I own because I owned both from when they split the shares. In the Zoom chat, I've just dropped the link. Here, let's have fun. I'm going to do a quick count here, 1, 2, 3, 4, 5, 6, 7, 8, 9, 10. So there's 12 rows, and then the column is 1, 2, 3, 4, 5, 6, 7, 8, 9, 10. It's at least 120. Some are two-digits, some are four-digits, so one could say there's probably between 115 and 125 or so individual stocks in my portfolio. How did it become this large thing that it is now? The first way that happened, and I'm sure there's a lot of heads that are going to nod when I say that, and that's because I'm an active member of The Motley Fool's premium services. There are a whole lot of really good ideas from some really smart people that are put forth on a monthly basis. That's part of it. To it, one of the things that members get here is access to people that are doing a lot of research, that are investing the time and energy doing that due diligence.

If you're going to leverage that, your number one, I own every single stock so I own the results. If they don't go well, I chose to buy, and I'm sure I might be a little bit grumbly about it. If I'm choosing to buy based on The Motley Fool's analysis and recommendation and then not doing it in due diligence on my own, it's still my fault. I own it if it doesn't do well, and if it does well, I put the money down so I own it too. You have to just accept the results if you're not going to do the due diligence. I will tell you that probably 40 percent of those stocks, I don't look at the quarterly results. I might read the update from one of my colleagues and I read the annual reports. I read the annual reports for every single company in my portfolio, but I don't look at every move they make. I don't look at the quarterly, I don't feel any need to do that because I trust the Fool's analysis. I trust people like Brian that are helping do the reporting. I trust the Gardners, Jason Moser. You think about these people that they are doing incredible work and so for a lot of the stocks that I own, I trust those people and it's worked quite well.

I talked about this yesterday on mindset. I made a decision, I think it was maybe late 2017 when I start thinking about it, and then early 2018 when I did it. One of the first Discovery missions, I can't remember the exact name but it was the micro-cap mission. There were a total of 30 stocks that were made buy recs [recommendations], and I didn't start when the Discovery started. I actually did a little bit of work for this mission and wrote a couple of research reports. That's what got me really interested in it. By the time I decided to follow it and invest along, they'd announced almost all of the stocks, so I got in a little bit late, but I committed to buy 30 stocks, and not put a tiny bit of capital in. I invested a pretty substantial amount of capital into these 30 companies and I committed to hold them all for five years, every single one of them.

When you do something like that following one of these missions, sometimes you just end up with more companies than you're going to be able to individually cover rigorously when you have a full-time job and a family and that sort of thing. That's how I got to where I am in terms of so many stocks, but that's not the only reason it happened that way.

It also happened because my philosophy when it comes to investing. I am very comfortable owning more companies than I can realistically cover because I understand some of the history of out-performance and getting the best returns. The number one thing is to have exposure to great companies for as long as you possibly can, that's it.

At the end of the day, if I own 130 companies and I invest an equal amount in every one, a worst-case scenario for any one of those companies going to zero is I'm going to lose less than one percent of the capital I invested. So minimal, individual risk. But if I managed to get a couple of 100-baggers, we're talking about individual stocks that can equal the entire amount of dollars I invested in another 100 stocks, it is an enormous multiplication factor. The numbers are great. Of course, there is risk that I'd dilute my total returns, but to me, the balance of reduced risk of individual equities versus diluting my returns is worth exchanging to me. It really is worth exchanging to me.

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Stocks Mentioned

Under Armour, Inc. Stock Quote
Under Armour, Inc.
UAA
$11.37 (4.12%) $0.45
Under Armour, Inc. Stock Quote
Under Armour, Inc.
UA
$10.40 (4.10%) $0.41

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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