A lot of people email me asking “how many stocks should I be following/watching or trading at a time?”
Personally, I don’t like to watch that many stocks at the same time because I can’t be as clear-minded or focused than if I’m following just a few stocks. Some people like to follow a lot of stocks all at once and try to pick out the winners – but typically this is not the best approach to trading.
It’s chaotic, messy and inefficient.
What you should do is choose the top 10 stocks and follow those. It will keep you clear-minded and focused. Over a five-year span, you shouldn’t be trading more than 5 or 6 stocks at a time.
Some people believe that by following and trading a lot of stocks, you’ll become diversified. But that’s not true. Diversity is a good thing – when it’s in your investments. Invest in real estate, in stocks, in rare coins collection, etc.
If you have a million dollars in your account – only 5 or 6 stocks is your maximum. Under $100,000 – 1 or 2.
Focus on your mental clarity by watching 10 stocks (maybe 20 if you have a large portfolio). For trading – no more than 5 or 6 at a time.