When I prepare to appear in a talk show, I get the chance to reflect on my past investment performance, such as the relationship between strategy and outcome, and how I could do better in the future.
In a recent review of my performance, I noticed that I have constructed a much more diversified portfolio than my peers in the asset management industry. In fact, my portfolio is becoming more diversified as its size increases.
Diversification is mainly for risk reduction. Different positions can also complement each other.
There are over 100 stocks in my portfolio. But oftentimes, I would invest in several counters in a certain sector. For example, I would purchase several Macau gaming stocks as a batch, or a number of luxury stocks as a group.
Owning various players in the same industry has the unique advantage of giving investors the exposure to the sector while not having to overly depend on the management quality of any specific company.
This approach also saves me a lot of time when I am building up a position because there is no need to worry too much about the risk of each individual stock.
This article appeared in the Hong Kong Economic Journal on June 19
Translation by Julie Zhu
[Chinese version 中文版]
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