I was trading stocks in between 2016-2018, and I thought - I knew a lot so I thought, if I pick 100 stocks, they will outperform the market easily. I prepared an excel spreadsheet, and picked 100 stocks. When I was preparing the spreadsheet - I had no idea that I would struggle to even select 100 stocks but I did. At least last 10 stocks, I picked, because I knew the name/symbol of those companies. This shows, how dumb I was in selecting those stocks. Today, I invest in 300 stocks on a daily basis, and fair to say, I at least know 1000 odd stocks...My robinhood account has 1814 stocks in it, so for sure I know a lot more than what I knew back in December, 2018.
Nevertheless, Big Picture is - That 100 Stock Spread sheet has outperformed S&P 500. 100K invested in those stocks - with dividend in 5 and half years would have given: $256,251.19. SPY would have given (with dividend), 235K. This is close to 29% per year and very good result, in my opinion.
There are stocks in that spreadsheet, which has gone to zero such as ENDP, CGC, BLUE etc. Some of the names were picked, purely because I knew the stock symbol, like Intel, Verizon, Ford, Pfizer etc. I admit, I knew nothing back then, but I always had a belief that there is going to be a stock or two - which will outperform to beyond my imagination. Turned out those two stocks were NVDA and AMD. $1000 invested in NVDA would be 37000 and similarly in AMD it would be 10,000.
But - it is not just the "Technology" stock that outperformed. As above image reveals, there are lot of non-technology stocks that has given outstanding results. JPM was 94 and now 200$. Costco was 194$ and now 845 (more than 300% up). Progressive Insurance was 59$ stock and now 212$ (257% increase). Dicks was 30$ and now 219$ and so on.
I invest today with the same mindset - I do not know for sure which 2 or 3 stocks that will outperform, but I know there is going to be another NVDA and AMD in my picks and in next 5 to 6 years, they will show remarkable results.
Perhaps, 100 stocks is too much diversification, and I invest in 300 so for sure it is a lot more. Perhaps, If I have to be really smart about it - I could pick 50 stocks for next 5 years...and as I gain more experience and confidence, would like to limit that list to 20-28 stocks.
