When investors think about capital allocation, the focus is often on which companies to buy. Yet the number of companies you hold and the size of each position can have just as much impact on your long-term results. Portfolio breadth and position sizing influence not only potential returns but also your exposure to risk and your peace of mind.
This is why the question, “What’s the ideal number of stocks to own?” cannot be answered purely by chasing performance. The risk of permanent capital loss matters. The emotional toll of volatility matters. Both are different for every investor.
At Teaminvest, we believe the right portfolio size depends on two main factors:
- How many companies you can genuinely understand and monitor.
- How much loss you could tolerate, both financially and emotionally, without making poor decisions.
Academic Theory vs Real-World Investing
Some academic models suggest that holding as few as eight perfectly uncorrelated stocks can balance risk and return. In practice, perfectly uncorrelated businesses are extremely rare. Even companies in the same industry can perform in dramatically different ways. One may be a Wealth Winner®, another a Capital Killer®.
Academia often treats volatility as risk. Experienced investors know volatility can create opportunity. The real danger is permanent loss of capital, usually caused by poor business economics or misaligned management.
Finding Your Number
Your ideal number of holdings will depend on your knowledge, experience, and temperament.
- The concentrated expert may own fewer companies, each studied in depth and selected for their long-term potential.
- The diversified learner may hold more companies to reduce the impact of mistakes while building knowledge.
- The opportunistic risk-taker may seek outsized gains with a smaller, high-conviction portfolio.
Why 10 to 25 Companies Works for Most Investors
Among Teaminvest members, the most common range is 10 to 25 companies.
Owning fewer than 10 increases the risk that a single setback could significantly damage your portfolio. Owning more than 25 makes it harder to develop and maintain the depth of understanding needed for business-owner investing.
Staying within this range allows investors to focus on quality businesses while managing risk effectively.
The Teaminvest Takeaway
The ideal number of stocks is not a universal figure. It depends on how well you understand your holdings, how comfortable you are with market swings, and how much risk you can live with while still sleeping soundly at night.
If you are asking, “How many companies should I have in my portfolio?”, the more useful question is:
- How many businesses can I follow with conviction?
- How much risk am I willing to bear both financially and emotionally?
At Teaminvest, we have found that disciplined analysis, thoughtful position sizing, and patience are the real drivers of long-term results, no matter how many companies you choose to hold.
