Retail investors often find themselves caught between two extremes: portfolios packed with dozens of stocks that are difficult to track, or highly concentrated bets on just a handful of companies. According to Trideep Bhattacharya, the sweet spot lies somewhere in the middle.
Speaking to NDTV Profit, Bhattacharya said investors should avoid overly concentrated portfolios but also resist the temptation to own too many stocks in the name of diversification. “Any number which is less than 20 is probably very concentrated for an individual investor. A number north of 100 is equally very broad-based,” he said.
Instead, he suggested that a portfolio of around 30 to 50 stocks strikes the right balance between diversification and conviction.
Why 30-50 Stocks?
According to Bhattacharya, successful investing requires continuous monitoring of businesses and their fundamentals. Beyond a certain number of holdings, it becomes increasingly difficult for individual investors to stay updated on earnings, management commentary and changes in industry dynamics.
“For one to have adequate control over how the fundamentals are moving around, 30 to 50 names is the maximum attention one can get to,” he said.
He also pointed to academic research suggesting that portfolios with 30-50 stocks provide adequate diversification without diluting return potential through excessive holdings.
Bhattacharya urged investors to shift their mindset from trading stocks to owning businesses. “The biggest folly that most investors make is we tend to overestimate what the short term might actually look like and underestimate the long-term changes that might stand to happen,” he said. Instead, investors should focus on earnings growth, market share gains, profitability and the broader trajectory of the business.
When Should You Sell?
Bhattacharya's framework for selling is equally straightforward. As long as the original investment thesis remains intact and the company continues to make progress, investors should avoid reacting to short-term market swings. However, if there is a material change in the business, management, industry structure or growth outlook, it may be time to reconsider the investment.
“If there is a thesis violation, if things are changing in the business or the business is not doing well, then exit is a better option,” he said.
For investors navigating today's volatile markets, Bhattacharya's message is to focus less on daily price movements and more on business fundamentals. A well-diversified portfolio of 30-50 carefully tracked stocks, coupled with a long-term investment horizon, may not sound exciting. But according to the Edelweiss Mutual Fund CIO, that discipline is often what separates successful investors from the rest.
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