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The Zulu Principle: Making extraordinary profits from ordinary shares by Jim Slater

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17. Portfolio Management

Aprivate investor with a relatively small portfolio has a considerable advantage over institutions with massive funds to invest. The institutions have to spread their investments over as many as two hundred stocks, and in some cases even more. The private investor probably holds a maximum of ten to twelve shares in his portfolio. I work on twelve to fifteen, but on occasions as few as eight.

Why is investing in ten stocks an advantage over investing in a hundred? Your first choice is obviously far better than your tenth, which in turn should be considerably better than your hundredth. Secondly, the fewer stocks in your portfolio, the easier it is for you to keep a really keen eye on them all. The Zulu Principle again. ...

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