concentrated investors are typically successful. Among brokerage-account holders with at least $100,000, those with just a handful of holdings tend to buy stocks that go on to beat the stocks they sell by three percentage points a year, according to a new study scheduled for publication this fall in the Journal of Financial and Quantitative Analysis. For account holders with lots of stocks, the average record is grim: The stocks sold go on to outperform the ones bought by 1.8 percentage points a year. The second thing to keep in mind is that no one criticizes the small-business owner for staking too much capital in a single company. Your concentrated portfolio makes you a business owner with stakes in five to 10 companies. And you have the advantage of picking the best ones from thousands that are already successful.
[on the other hand]
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