No. of Recommendations: 1
So, yes, Virginia, you can eliminate nonsytematic portfolio risk, as defined by Modern Portfolio Theory, with a relatively few stocks. It's just that nonsystematic risk is only a small part of the puzzle. Fifteen stocks is not enough. Thirty is not enough. Even 200 is not enough. The only way to truly minimize the risks of stock ownership is by owning the whole market.

This was the conclusion of the Bernstein study- yet Buffett, the LUK duo (Ian Cumming/Joseph Steinberg), Peter Lynch, and others, probably never came/come anywhere close to owning the market to produce the results they have.

If the benchmark is the S&P 500, it seems like a core position (80-90%) in an Index that mimics the S&P 500 and the remainder invested in individual stocks in an attempt to find one of those 10 superstocks of the decade, would seem like a better strategy. The real risk is not finding one of those 10 superstocks that could supercharge ones returns.

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