Do   Not   DIVERSIFY

"Diversification is a protection against ignorance"

"We think diversification as practiced generally makes very little sense for anyone that knows what they are doing"

"We like to put a lot of money in stocks we strongly feel about"

By. Mr. Warren E. Buffett (CEO of Berkshire Hathaway)

https://youtu.be/H3Q8a9imiFs

Barron's magazine just published an article in their November 18th issue (page 18).  I am not surprised that they indicated that:

"Nearly all of the top 20 actively managed equity mutual funds in the US., as ranked by assets, are behind the S&P 500 indexe's 23.2% return through October.  All but three, that is"

On closer scrutiny, I found that the average performance of the top 20 actively managed equity mutual funds was a mere +19.72%.  That does not include the fees that these mutual funds charge you.  $QQQ (Growth Stock Index) on the other hand produced +31.54% year to date.  That is +37% better than the average performance of the actively managed mutual funds.

Fire  Your  Mutual  Funds  and  Financial  Advisors
Take Control of Your Financial Decisions

Learn  to  Invest  in  Growth  Stocks

Concentrate  Your  Portfolio

Diversifying exposes you to greater risks in fact.  It's best to concentrate your portfolio with a few leading stocks only.  If one has a portfolio of $250,000 to $500,000, IBD(Investors Business Daily) suggests that one should have no more than 6 to 8 stocks in their portfolio.  As a Growth Stock investor and a trader, laggards should be removed and use the proceeds from it to increase the position size in the leading stocks.  Here is a case study of $RH - a leading stock in the retail industry group:

1. Friday June 7th we had a "Follow Thru" day with the Market in a Confirmed Uptrend.  On Thursday June 13th, the stock gapped up +16% during earnings announcement with trading volume that was 9 times the average daily trading volume.  This is an indication of institutional interest in the stock.  Position was initiated the next day at $109.82 at market open.
2. On Sept 9th - a day prior to the earnings announcement, 1/2 a position was closed out at market open for $152.89.  The stock had already made +39.22% within 13 weeks between earnings announcement.
3. On Sept 10th, stock jumped up +20% within days, triggering the  "8 Week Hold Rule".  Institutions came in with trading volume that was 3 to 5 times the daily average trading volume for 4 days in a row.  1/2 position that was left was already +58.01%
4. On Friday Oct 4th, another position was initiated at $170.  It's a leading stock that continues to be supported by the institutions.  They ultimately are responsible for the movement in the stock.  
5. On Nov 15th, the stock once again gapped up +7.56% in trading volume that was 3.5 times the average trading volume.  That is once again a confirmation of the institutional interest in the stock.  Original position in the stock is now +71.62% within 26 weeks.  The second position that was initiated on Oct 4th is now +10.78% within 6 weeks. 

Concentrating my portfolio with the leading stock $RH enabled me to make a sizeable difference to my portfolio.  Retail investors are much more nimble as compared to the mutual funds who have a large $ investments to make in a stock.  It takes them several weeks to get in and out of the stock.  They have to have all of their monies invested all the time, even when the pulse of the market changes to  "Market in Correction".  Retail investors like ourselves can get in and out of the market with just one mouse click.

Happy Trading!

Amin