Market Participants: Diversification and Ensemble Capital

market participants: Sean Stannard-Stockton, president and chief investment officer of Ensemble Capital, agrees, saying that while diversification is critical in mitigating risk, active market participants should be mindful of just how much diversity is ideal, according to Market Watch. Too much of anything can be bad for you and diversification can be taken too far, he wrote in a post on the Intrinsic Investing blog. Investors have been so oversold on diversification, Fisher said many decades ago, that fear of having too many eggs in one basket has caused them to put far too little into companies they thoroughly know and far too much in others which they know nothing about. But the level at which too far' kicks in is surprising to most people. Stannard-Stockton used this chart based on data discussed in the book, A Random Walk Down Wall Street, by Burton Malkiel to illustrate the ideal number of stocks to own for those looking to beat the market Caption outside of wrapper for normal article images As you can see, once 25 stocks are owned, active investors pretty much capture all the benefits of diversification. That number, of course, depends on what an investor is trying to achieve. (news.financializer.com). As reported in the news.