For stock, how many sectors should I invest in? If I hold ETF, should I still get the stock that is within the ETF? Any pro and con to hold more stock vs less stock?

How many sectors to look into? Which sector to consider?
How many stocks from each sector? Should we not have too many from a particular sector?
In total, how many stocks should I hold to not overdiversify?
What the pro and con to hold more stock vs focus just few stock?

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Frankie Rappaport

21 Nov 2020

Current thinking says, that you should not invest into sectors, but just broad(est)ly diversified into global instruments.

For stocks this could well be an MSCI World or MSCI ACWI ETF.

However many (including me) choose to invest differently: into sector ETFs or even single stocks. I like U.S. & China technology and biotechnology sectors.

I am well aware that this strategy worked fine for 1-2 decades now. But I am also very aware that this could be a very erroneous strategy, because of the theory of 'return to the mean' and also because of the higher volatility and then risk. One must be very very patient when the markets turn down and NEVER sell then.

Anyway, MSCI World/ACWI seem more prudent.

To read on my personal (maybe flawed) ETF choices, You can read here:

https://seedly.sg/questions/what-is-your-genera...

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