More Stocks May Not Make a Portfolio Safer

By JASON ZWEIG NOVEMBER 21, 2009


Not putting all your eggs in one basket is the most basic principle of investing. It also may be the hardest to get right.

Investors have long been told by stockbrokers and financial planners that to have a properly diversified stock portfolio, you need shares in only 10 to 40 companies. Even the great investment analyst Benjamin Graham urged "adequate though not excessive diversification," which he defined as between 10 and about 30 securities.

As many studies have shown, at least 40% of the variability in returns can be reduced by moving from a single company to 20. Once a portfolio contains 20 or 30 stocks, adding more does little to damp the fluctuations in wealth over time.

Shop for Dividends in This Aging Bull Market

By BRETT ARENDS
NOVEMBER 22, 2009


Wall Street has rallied a long way since the dark days last winter. But there are still plenty of blue chips offering big dividend yields.

Screen the market for yields over 3% that are well-backed by earnings and a surprising number of big household names come up -- Kraft Foods, Clorox, Sara Lee, Sysco, Johnson & Johnson, Merck, BP, NStar, Verizon Communications and AT&T.

A lot of these steady Eddies have been left behind by this year's mad stampede for higher-risk, higher-excitement investments -- from China to the Cheesecake Factory.

It's a good time to remember that high-excitement stocks often end up providing investors with high drama and high blood pressure instead.