Importance of a basket of value stocks

I have recently come to realize the importance of having a basket of value stocks instead of concentrating on a few. I have also realized the importance of looking and tracking the returns at the value portfolio level rather than at each individual value stock.

As you can see from my portfolio, not all the value stocks are in green, I do have a couple that are in the reds. And this has always been the case for the past 1 year plus since I started. I always have some winners and some loser. Fortunately, at the portfolio level, the returns have been good so far.

I remember there was a time when my returns on Hock Lian Seng (HLS) was negative at around 15%. However, at the value portfolio level, the return was positive. This is the reason why I am able to overcome the emotion of panic selling and holding HLS till now. As you all can see, HLS has turned positive now.

I know many people will disagree on having too many stocks in a portfolio. As what Warren Buffet had said before. “Diversification is protection against ignorance. It makes little sense if you know what you are doing.” Well, I agree that diversification can hurt your returns and you shouldn’t do it if you know what you are doing.

However, I am not Warren Buffet and I know I will never be him. So, having a basket of stocks selected based on the value criteria to diversify my ignorance and still beat the market return sounds like a fair enough deal to me.

Well maybe when I learn more about how to truly value a company, I will hold a more concentrated position.

Happy Value Hunting.