The 8 Stock Portfolio is the Secret. Here's How You Get to It

livemint.com:

earlier piece, I discussed why people generally do not get rich with stocks. I attributed this to: > One, there is an under allocation to direct stocks as a percentage of overall wealth >Two, there are too many stocks in a portfolio >Three, there is a lack of an allocation plan between each stock >Fourth, the win rate with direct stocks is very poor These are almost unarguable facts. But then we do know that a few people do get really rich investing directly in stocks.

Can we learn anything from them that could help us improve our performance? Before moving ahead, note that this approach to investing directly in stocks is perhaps not for all. You need to be absolutely sure that you have the skill and temperament to pick stocks and build your portfolio. If you assess and realize that you don’t have it in you, or that your track record leaves a lot to be desired, perhaps consider going instead with a low-cost index fund.

With that said, here are my takeaways to building a stock portfolio that could potentially make you really rich. This is based on reading about how these super investors achieved success, and even talking to some of them on my podcast. And my personal experience.

Let’s kick this off with an excerpt from a Warren Buffett interview. Adam Smith: If a younger Warren Buffett were coming into the investment field today, what areas would you tell him to point himself in? Warren Buffett: Well, if he were doing – if he were coming in and working with small sums of capital I’d tell him to do exactly what I did 40-odd years ago, which is to learn about every company in the United States that has publicly traded securities and that bank of knowledge will do him or her terrific good over time. Smith: But there’s 27,000