# Single Equity Percentage Allocation in Portfolio



## Killer Z (Oct 25, 2013)

Just wanted to get some opinions on the maximum percentage allocation you would allow any individual equity to represent in your portfolio. I believe a large determining variable would be the overall size of your portfolio. Here are my thoughts:

Less than $50,000 - probably should not own individual equities but rather ETFs or mutual funds for diversification purposes
$50,000 to $100,000 - each equity should represent no more than approx 7.00% of your overall portfolio
$100,000 to $250,000 - each equity should represent no more than approx 5.00% of your overall portfolio
$250,000+ - each equity should represent no more than approx 3.00% of your overall portfolio

Would be very interested to hear your thoughts. Thanks.


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## Jon_Snow (May 20, 2009)

Crescent Point Energy comprises about 10% of my portfolio. Not entirely comfortable with this despite it working out quite spectacularly so far in 2014.

5% in a single equity seems about right to me.


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## gibor365 (Apr 1, 2011)

I consider all our 6 accounts: 2 RRSP, 2 LIRA and 2 TFSA like one big portfolio.... we're in 3rd category 250K+ and our biggest holding BCE at 3.9%


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## lonewolf (Jun 12, 2012)

The number of systems traded not the number of stocks that is of primary importance. If through back testing the trader/investor developed 3 systems that statistics indicate they have an edge & one blows up they have the other 2 systems to fall back on. If you buy a bunch of stocks based on one system & that system blows up then there is not 2 other systems protecting the portfolio.


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## My Own Advisor (Sep 24, 2012)

Across 7 investing accounts, treating them as one portfolio, I think our biggest individual stock holding is about 6% of the portfolio.


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## marina628 (Dec 14, 2010)

Everyone is going to have a different answer at one point (2011)20% of my portfolio was in ENB and 31% was split between TD,BNS AND CM.I am heavy on Canadian banks ,DIS is my one long term US stock that I started purchasing in 2009 and today is 8.9% of our total portfolio including Real Estate .I have not bought any in the last 6 months and have the advantage of buying most of it at times when our dollar was worth $1.05 USD.I am currently sitting on 40% cash and moving forward my purchases will be just index funds ,have sold lots of the random stocks i have bought over last 2-3 year ans sticking to the blue chip dividend funds.


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## birdman (Feb 12, 2013)

38% in RY, CM, BMO, and TD. Divy is secure.


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## OhGreatGuru (May 24, 2009)

As others have suggested "it depends". You should be prepared to make exceptions depending on the nature of the stock. "Rules are made for the obedience of fools and the guidance of wise men."


_Less than $50,000 - probably should not own individual equities but rather ETFs or mutual funds for diversification purposes_
-Agree
_$50,000 to $100,000 - each equity should represent no more than approx 7.00% of your overall portfolio_
- Conventional wisdom was that you needed $100K to justify trading costs with a discount brokerage - maybe this has come down with competition for this market. With only $50k, and 7% max., you will be buying in rather small lots of $3500. 
_$100,000 to $250,000 - each equity should represent no more than approx 5.00% of your overall portfolio_

_$250,000+ - each equity should represent no more than approx 3.00% of your overall portfolio_

- You are passing a point of diminishing returns. Most references suggest a maximum of 20 well-chosen stocks is adequate diversification.


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## Retired Peasant (Apr 22, 2013)

I wouldn't let any one stock get over 10%; target would be 5%. I wouldn't let the size of the portfolio matter. 5% is 5%


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## My Own Advisor (Sep 24, 2012)

Jon_Snow said:


> Crescent Point Energy comprises about 10% of my portfolio. Not entirely comfortable with this despite it working out quite spectacularly so far in 2014.
> 
> 5% in a single equity seems about right to me.


CPG has been rockin'.


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## martinv (Apr 30, 2009)

I have two stocks that over the past 17 years have increased so that each represents about 30% of my portfolio.
I have no intention of selling either.
Starting out, 10% would be the lowest for me. That would make it 10 stocks which is the maximum I could ever research and look after properly.


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## Eder (Feb 16, 2011)

BCE is 15% of my portfolio...I have been adding Rogers since it has been in the penalty box and is about 9%. I try not to buy crummy or over valued companies just to get sector allocation. I hold 27 different stocks & reits...too many I think and hope to get it to less than 20 soon.


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## Soils4Peace (Mar 14, 2010)

If you hold too much in one stock, country or sector, you are taking unnecessary risk. 5% is a reasonable maximum for a company, 20% for a sector.


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## My Own Advisor (Sep 24, 2012)

More than happy to own more than 25% in financials and energy, that's even less than S&P/TSX sectors, especially with the run over the last couple of years.


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## gibor365 (Apr 1, 2011)

Eder said:


> I hold 27 different stocks & reits...too many I think and hope to get it to less than 20 soon.


 I hold much more... almost all of my stocks are dividend paying blue chips ... more solid stocks I have, less chances that if one cuts dividends or crashes - it will seriuosly affect my portfolio


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## My Own Advisor (Sep 24, 2012)

I own almost 40 stocks. Happy to own them all. The only dud is TA.


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## martinv (Apr 30, 2009)

Very interesting how different each of our investment ideas are....yet we all seem to do okay.
Which begs the question, "how can we be so different yet achieve positive results?" 
Perhaps it is because we all give our investments time, thought, and research.
It also illustrates that there is no magic "formula" out there.


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## My Own Advisor (Sep 24, 2012)

Absolutely martinv.


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## Synergy (Mar 18, 2013)

"Single Equity Percentage Allocation in Portfolio"

Are we talking about a percentage of one's entire portfolio (stocks, bonds, & cash) or simply a percentage of one's equity allocation? 5% of one's entire portfoilio would be quite different from 5% of ones equity allocation.


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## protomok (Jul 9, 2012)

martinv said:


> Very interesting how different each of our investment ideas are....yet we all seem to do okay.
> Which begs the question, "how can we be so different yet achieve positive results?"
> Perhaps it is because we all give our investments time, thought, and research.
> It also illustrates that there is no magic "formula" out there.


It also helps that the TSX and S&P500 are at record highs and posting double digit returns per year  I think the true test would be whether or not our individual stock picks are beating the indexes.


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## Causalien (Apr 4, 2009)

Well, this post is not complete without me. I am the worst offender out there. 
100% allocated in single equity.
One stock represent 50% Of the portfolio. Another 25%. Needless to say, I have some weird dilemmas.


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## My Own Advisor (Sep 24, 2012)

protomok said:


> It also helps that the TSX and S&P500 are at record highs and posting double digit returns per year  I think the true test would be whether or not our individual stock picks are beating the indexes.


Check out TD Bank over the last year. IPL, even better.


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## fatcat (Nov 11, 2009)

Canadian National Railway 10.31%


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## HaroldCrump (Jun 10, 2009)

My tolerance threshold is up to 33% (1/3rd).
At one time, Manulife Financial (MFC) was over 20% of my holdings.
I have bought/sold a few times, but the core number of shares has stayed the same, more or less.
It has become a smaller portion of my holdings because of growth in other areas (and net new contributions).

In the past as well, a few stocks have hovered in the 20% - 25% range for me.
At one time, PWF was nearly 20%, and so was Husky Energy.

IMHO, a bigger risk than any one stock being a certain % of portfolio, is when a small number of stocks (< 3) are a big part of the portfolio.
For e.g. 1 stock being 35% of portfolio is less risky than 3 stocks being 75% of portfolio.
And if those 3 stocks happen to be in related industries, then it is a big, red flag and should be remediated immediately.


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## fatcat (Nov 11, 2009)

HaroldCrump said:


> My tolerance threshold is up to 33% (1/3rd).
> At one time, Manulife Financial (MFC) was over 20% of my holdings.
> I have bought/sold a few times, but the core number of shares has stayed the same, more or less.
> It has become a smaller portion of my holdings because of growth in other areas (and net new contributions).
> ...


i would love to see an ideal 10-stock in 10-sectors portfolio

i would nominate:

CNR - Industrials
TD - Financials
SU - Energy
CCO or TCK - Materials
JNJ - Healthcare
??? - Consumer Staples
SBUX - Consumer Disc
CU - Utilities
T - Telecom
GOOG - Infotech

don't have the courage to have this few stocks however


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## Ethan (Aug 8, 2010)

15.94% of my net asset value is in shares of CNR. 10.91% is in ACQ and 9.71% is in BCE. I hold positions in several Canadian banks, cumulatively they represent ~15% of my portfolio. My portfolio is many multiplies larger than $250k; I have the size to diversify as much as I want to. But I have conviction in my picks and have no problem taking large positions in individual stocks.

I question why an individual stock picker would not allow a single equity to exceed 3% of their portfolio value. You would need to hold at least 34 stocks. I simply don't have the time to monitor 34 companies and their competitors in sufficient depth to be comfortable with my selections. I also question how much conviction you can have in a single stock if you're not willing to put more than 3% of your money there. If you're not willing to risk more than 3% of your portfolio in one stock, perhaps you would be better served by an ETF or index fund.

Diversification is protection against ignorance - Warren Buffett


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## My Own Advisor (Sep 24, 2012)

To your point, I also don't have time to monitor 34 companies....even though I have almost 40 individual companies in my portfolio. 

To the earlier post (and point), the top 7 CDN banks, the top CDN lifecos, the top CDN industrials (e.g., CNR), the top CDN energy companies (e.g., SU) and the top utility companies don't take any effort on my part now except when to buy them (ideally after a correction). This is because these stocks collectively make up most of the mutual funds, ETFs and institutional funds in Canada and if they go under, we're all doomed. Not much to monitor, very passive actually.

The monitoring I do happens with the smaller stocks, that might be 5-8 stocks in my portfolio.


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## blin10 (Jun 27, 2011)

I agree, not to mention, in each sector there are only few cream of the crop companies, why would I over diversify with a shittier companies in the same sector just so I can say i have 5% allocation? there's only one IPL,PPL,ALA, why should i buy a lower quality company in the same sector to make it to 5% allocation? I rather have lets say 2 best pipelines with 15% each instead of 6 pipelines with 5% in each 



Ethan said:


> 15.94% of my net asset value is in shares of CNR. 10.91% is in ACQ and 9.71% is in BCE. I hold positions in several Canadian banks, cumulatively they represent ~15% of my portfolio. My portfolio is many multiplies larger than $250k; I have the size to diversify as much as I want to. But I have conviction in my picks and have no problem taking large positions in individual stocks.
> 
> I question why an individual stock picker would not allow a single equity to exceed 3% of their portfolio value. You would need to hold at least 34 stocks. I simply don't have the time to monitor 34 companies and their competitors in sufficient depth to be comfortable with my selections. I also question how much conviction you can have in a single stock if you're not willing to put more than 3% of your money there. If you're not willing to risk more than 3% of your portfolio in one stock, perhaps you would be better served by an ETF or index fund.
> 
> Diversification is protection against ignorance - Warren Buffett


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## gibor365 (Apr 1, 2011)

My Own Advisor said:


> To your point, I also don't have time to monitor 34 companies....even though I have almost 40 individual companies in my portfolio.
> 
> To the earlier post (and point), the top 7 CDN banks, the top CDN lifecos, the top CDN industrials (e.g., CNR), the top CDN energy companies (e.g., SU) and the top utility companies don't take any effort on my part now except when to buy them (ideally after a correction). This is because these stocks collectively make up most of the mutual funds, ETFs and institutional funds in Canada and if they go under, we're all doomed. Not much to monitor, very passive actually.
> 
> The monitoring I do happens with the smaller stocks, that might be 5-8 stocks in my portfolio.


More or less same here  
Monitoring just several small stocks ... to your list ("don't take any effort on my part") would add dividends champions like JNJ, MCD, PEP, KO, KMB, APD, CVX, COP, T, PG, PM, MO .... maybe missed some more


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## My Own Advisor (Sep 24, 2012)

You read my mind gibor for some U.S. stocks as well...


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## gibor365 (Apr 1, 2011)

My Own Advisor said:


> You read my mind gibor for some U.S. stocks as well...


 I know more or less your portfolio  I have similar one, may be a little more individual stocks 
Smaller . more risky stock are only 10-15% in my portfolio


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## 4570 (Aug 2, 2009)

My Own Advisor said:


> Check out TD Bank over the last year. IPL, even better.


From my office in the oil sands I can see what IPL is doing.
They are my biggest holding, (for years).
I have been inside their pump houses.

Like the oil sands, or not.
IPL and KEY are positioned to do well from the ongoing growth in output.


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