John Lee, or Baron Lee of Trafford, believes that ‘few investors apply much consistency or logic to the creation of their personal investment portfolios’. Indeed, John Lee (Britain’s first ISA millionaire) thinks that the portfolio of the average investor probably looks a bit like ‘a dog’s breakfast’, with ‘no obvious theme or structure’ and a number of shares that were bought because City columns said that they were ‘well worth a punt’. Does this sound anything like your portfolio? Even if we do read share tips with a pinch of salt, there is no harm in taking advice from an ISA millionaire. So we’ve summarised the ‘Constructing a portfolio’ chapter of John Lee’s excellent book, How to Make a Million – Slowly. Lets explore what his portfolio might look like.
How many stocks should investors hold?
Warren Buffett, who became the world’s richest man slowly, suggests that investors should invest in more concentrated portfolios. While Buffett proclaims that ‘diversification is a hedge for ignorance’, John Lee takes a different approach. He likes to ‘hold around 35 different stocks’, although he does warn that too much diversification is unnecessary. This is because the process of monitoring and researching…
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