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Think of the goal how many positions to hold as like the Pirate Code - it's really more of a guideline.

It's not a question of trying to hit a target, or being too diversified. If you cannot manage a large portfolio, then it makes sense to reduce the number of positions to one which you can manage. But if you can manage a larger portfolio, there's no driving reason not to. It is really a personal choice for each Fool.

The goal is to maintain diversity so that your portfolio does not carry too much risk from a single investment. The Gardner Brothers have suggested 15-25 companies is a good start, or at least an aspirational starting goal. How many total positions and how much you invest in that initial position is just a question of with what you feel comfortable.

Foolish investing philosophy says to plan to hold your positions for 3-5 years (or longer) and expect 40% of them to under-perform market, and 10% - 25% of your portfolio to drive 90%-100% of your gains. That last point is why it's essential to diversify, because there is no way of knowing in advance which companies will do what.

Personally, I have well over 100 positions in my portfolio. I don't watch each of them on a regular basis. I don't watch any of them on a regular basis. I am committed to long term (3-5 years or longer) buy-and-hold investing, which means that these positions don't need me to watch the pot to know that they are boiling.

Instead, I depend on my TMF Analyst Teams to make appropriate recommendations, read premium analysis articles, and participate in various Service and Premium Community discussions to keep up to speed. One of the biggest mistakes a Fool can make is to take action when inaction is the better course of action. And one way to avoid unnecessary action is to simply not sweat over the market movements of his portfolio.

But that's me. I'm not you. You should be grateful for that. The bottom line is that you shouldn't look at your portfolio as a inflexible or rigid structure but as a living, breathing means of building wealth for your future, one that can adapt to your changing goals, values, risk tolerance, knowledge and experience. It really is more like a guideline.

If you are looking for a way to be more discriminating in what companies you invest, one strategy for Rule Breaker or Stock Advisor members would be to focus on the Best Buy Now opportunities which are also Starter Stock companies, followed by the remaining Best Buy Now opportunities, then the remaining Starter Stock companies. Your Analyst Team thinks the active recommendations are good long term, buy-and-hold opportunities, so the current market price isn't as important as how long you hold the position.

Another approach is to build a Buy Watch List divided into four categories. First, there are the Must Haves, companies in which you have deep conviction and absolutely want in your portfolio. Second, there are the Strong Haves, companies in which you have strong conviction but wouldn't just totally die if, like, they weren't in your portfolio. The last category is the Nice Haves, companies in which you have positive conviction but aren't especially excited over. The last category is Never Haves, those companies you just flat out think are wrong for you.

This way, when the market presents discount opportunities, you are ready with a shopping list. The trick is to already have the list of companies you want to open or add to a position on in advance and then your focus is on the opportunity rather than the market price.

Who has a simple rule that if you cannot remember what a company does to generate revenue or how it plans to grow earnings, then it probably has lost its footing in your portfolio...

Premium Home Fool: Ask me a Foolish Question, I'll give you a Foolish Response!
Ticker Guide: The Walt Disney Company (DIS), Intuit (INTU), Live Nation (LYV), CME Group (CME), MongoDB (MDB), Trip Advisor (TRIP), Vivendi SA (VIVHY), Mimecast (MIME), Virgin Galactic (SPCE), Axon Technologies (AXON), 51Jobs (JOBS)
Disclaimer: This post is non-professional and should not be construed as direct, individual or accurate advice
Disassociation: The views and statements of this post are Fuskie's and are not intended to represent those of The Motley Fool or any other sane body
Disclosure: May own shares of some, many or all of the companies mentioned in this post (
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