Common Stocks and Common Sense: The Strategies, Analyses, Decisions, and Emotions of a Particularly Successful Value Investor

by Edgar Wachenheim

To achieve both concentration and diversity, a portfolio might consist of 15 to 25 holdings, with no individual security accounting for more than 12 percent of the value of the portfolio and no one industry accounting for more than 25 percent. The limits should be based on costs, not on market value, so that the portfolio manager is not forced to sell shares in a holding that has appreciated sharply, but that still remains attractive.

To achieve both concentration and diversity, a portfolio might consist of 15 to 25 holdings, with no individual security accounting for more than 12 percent of the value of the portfolio and no one industry accounting for more than 25 percent. The limits should be based on costs, not on market value, so that the portfolio manager is not forced to sell shares in a holding that has appreciated sharply, but that still remains attractive. How to create portfolio