Q: 10:31 AM 7/11/2023
We would appreciate Peter's opinion because we are concerned about the litany of advice we hear against large portfolio concentrations in individual stocks or sectors because we are repeatedly told this is bad.
But in your answer to Angelo's question on the 7 giant US technology companies on June 23rd 23 you said "some investors like concentration. In fact, done right, concentration is one of the better ways to increase wealth. But for a general investor, we would suggest a cap of about 30% here.
5i seem to be content with 15% in the Brookfields
June 22nd to James you said "We typically get nervous as our [individual] weightings approach 10% and caution against a 'one stock' portfolio".
In our own portfolios of Canadian stocks, as long term forever holders would not the same logic apply to hold a 30% or more weighting in the 5 big Canadian Banks through all the ups and downs of the markets, for steady dividend income with some growth?
One family member has comfortably held RY since 1968 and 10 shares bought 55 years ago have grown to 326 shares today through 4 stock splits and dividend reinvestment when available, and never regretted or worried about it.
The same logic must surely apply to holding other large sector positions: 15% in 3 Pipelines, 35% in 7 Utilities, and 2 Telecoms.
I know most Brokers and Advisors like to advocate "diversification" and "trimming" and switching to "hot" sectors but it seems to me that much of these strategies are designed, even with the best of intentions, to just encourage trading and switching to generate fees.
So Peter's best advice please - in the end how bad is it to just hold a concentrated Canadian Blue Chip portfolio in Financials, Pipelines, Utilities, and Telecoms with a small 15% scattering in some other sectors? This way we have few worries, no foreign currency risk, miss the thrilling scary ups and the frightening crashes [like Nortel and Concordia], but sleep at night.
Thank you............ Paul W. K.
We would appreciate Peter's opinion because we are concerned about the litany of advice we hear against large portfolio concentrations in individual stocks or sectors because we are repeatedly told this is bad.
But in your answer to Angelo's question on the 7 giant US technology companies on June 23rd 23 you said "some investors like concentration. In fact, done right, concentration is one of the better ways to increase wealth. But for a general investor, we would suggest a cap of about 30% here.
5i seem to be content with 15% in the Brookfields
June 22nd to James you said "We typically get nervous as our [individual] weightings approach 10% and caution against a 'one stock' portfolio".
In our own portfolios of Canadian stocks, as long term forever holders would not the same logic apply to hold a 30% or more weighting in the 5 big Canadian Banks through all the ups and downs of the markets, for steady dividend income with some growth?
One family member has comfortably held RY since 1968 and 10 shares bought 55 years ago have grown to 326 shares today through 4 stock splits and dividend reinvestment when available, and never regretted or worried about it.
The same logic must surely apply to holding other large sector positions: 15% in 3 Pipelines, 35% in 7 Utilities, and 2 Telecoms.
I know most Brokers and Advisors like to advocate "diversification" and "trimming" and switching to "hot" sectors but it seems to me that much of these strategies are designed, even with the best of intentions, to just encourage trading and switching to generate fees.
So Peter's best advice please - in the end how bad is it to just hold a concentrated Canadian Blue Chip portfolio in Financials, Pipelines, Utilities, and Telecoms with a small 15% scattering in some other sectors? This way we have few worries, no foreign currency risk, miss the thrilling scary ups and the frightening crashes [like Nortel and Concordia], but sleep at night.
Thank you............ Paul W. K.
