There is a general saying that if you take position in more than 5 counters in any market, then you do not know what you are doing.

This very true if you want to be an excellent investor. I have given up being one, I rather want to be good investor to make moderate risk and also make moderate gains. That explains why I leverage on real estate.

Good Side Of Excellent Returns
Imagine someone that invested fully on KCB when it was 18 bob it is now circa 30 bob.
This is also applicable to NMG, EABL, Safcom etc

Bad Side
Imagine someone that invested fully in Kenol looking without being aware of the buy out plan.
HF (Housing Finance) Q3 result was not also spectacular

Moderate
In NSE I split my portfolio across 10 - 12 counters spread over all sectors except agricultural.
The different stocks are like my matatus in Kenya realm that bring periodic returns(annually
and mostly bi annually)
That means if one counter "misbehaves" , 90% of my portfolio is intact. It is not an excellent style but I believe it is a good one.
In addition as income is my investment goal, spreading to money counters enable me to have income spread over different times of the year (Interim and finals). That makes my bank account active of dividend incomes by EFT.
I believe everybody can choose or device a
suitable strategy, but what is very important is
sustenability that have an enduring strategy.
It also depends on your age, risk apetite and how smart you are to cut losses where necessary or take profits (if you are speculating on a few stocks).
For me, no counter can hold me into ransom by affecting my portfolio negatively if things go wrong that was not forseen.

@Young. yes good thoughts on diversification.Any smart investor will tell you it is the only way to stay in the game for many many years.Those who speculate or depend on one or two could make money but when you get blown off when things go south it sets you back big time and could take you out of the game.good advice young

Diversification is the only way of securing your investment, i fully agree.
why do you not invest in agriculturals?

Stockswise I had better options than Agric.
I could not understand agric stocks but I know they are :-


- Vulnerable to unpredictable weather
- Lowly traded volumes
- Miserly, rarely give bonus or do splits
- Scanty company news

Please trade with caution as they are very unpredictable. I pray you do not erode your previous gains!

Although one may have made a gain how do you factor in the future value of money in calclating the gain to ensure you do not actually end up with much less value even when the amounts are more than amounts you initially invested.

Difficult to tell. That is the risk factor in stock investment. Why not balance stock investment with other others for a leverage ?

Gatheuzi wrote
Stocks will generally outdo inflation in both nominal and real terms. What I often do is carry out an annual analysis of my every stock holding (never more than three at any given time). If say I have made 42% profit I know I am ok, but if it is like -15% then I know I am making losses.



In 2009, 2010 and up to Oct 2011, NSE stocks did not outdo inflation, so sometimes with all accurate estimates using fundamentals, your portfolio is in the red, the growth is even negative not to talk of matching up with inflation. There are some factors that is not imagined, that might make stocks to drop. Talk of goverment policy, talk of insecurity, talk of trade disputes in the company you invest in or even weather.In this situation there is no fundamental problem with the company itself but the problem is with the operating environment


In addition internally the companies you invest in can return less than expected result
beyond expectation of previous performance, talk of HFC Q3, talk of Kenol, or even KQ?
or even Equity Q3.

You either sale off to cut loss or hold to the stocks with fingers crossed that it will recover. .