Best effort Quote by Peter Lynch
“There's no use diversifying into unknown companies just for the sake of diversity. A foolish diversity is the hobgoblin of small investors. That said, it isn't safe to own just one stock, because in spite of your best efforts, the one you choose might be the victim of unforeseen circumstances. In small portfolios, I'd be comfortable owning between three and ten stocks.”
About This Quote
Source Interview: “Investing Strategies” on CNBC, 2005
Diversifying across many unknown stocks offers little benefit; a modest number of well‑chosen stocks balances risk and reward.
In simple terms: Don’t over‑diversify with unknowns.
Hold a few solid stocks.
Themes
Mood
Type
When to use this quote
- retirement planning
- risk assessment
- financial advising
Key Concepts
Questions to Reflect On
- How many stocks suit your risk tolerance?
- What criteria define a “solid” stock?
Too few stocks increase specific risk.