How many stocks should I own?

One of the more important decisions you need to make is the structure of your equity (stock) portfolio. Diversification can be your friend but it can also be your enemy. To beat the market, you cannot just be the market.

Your strategy should stress quality over quantity and this will give simple and effective number of great stocks to help you build two critical equity portfolios – growth and income.

In the end, this will help you build a winning formula for your overall DIY stock portfolio..

What stocks to buy?

The most critical element in equity investing is knowing which individual stocks to buy and which to avoid. The basic fundamental criteria to use is to look at any stock as a potential investment.

From revenue, earnings, cash flow, and balance sheet considerations to the industry, near and long-term growth catalysts, valuations to management.

When to buy?

Your portfolio strategy could involve staggered purchases over a 12 to 18-Purchasing 1-2 stocks each month over a year will help prevent you from purchasing your shares at a near-term market top.

Perhaps most importantly, when to sell?

Investing is not just knowing what stocks to buy, it is also about knowing when to sell.

Look to uncover both unknown growth and dividend stocks that have produced tremendous returns including;

Canadian & US Growth Stocks.. such as:

The Boyd Group Income Fund (BYD.UN:TSX) – Up 3,700% and still a BUY.

WaterFurnace Renewable Energy Inc. (WFI:TSX) – SOLD for a 2,561% gain.

Enghouse Systems Ltd. (ENGH:TSX) - Up 600% and still a BUY.

Janna Systems Inc. (JAN:TSX) – Taken over for a 4,185% gain.

Recent (Past Year)

Photon Control Inc. (PHO:TSX-V) – 221% gain and counting.

Applied Optoelectronics Inc. (AAOI:NASD) – 222% gain and counting.

Canadian Income (Dividend) Stocks

Brookfield Infrastructure Partners L.P. (BIP.UN:TSX) – 291% and counting

Exchange Income Corporation (EIF:TSX) – 250% and counting

A quote from the most successful investor of all time, Warren Buffett.

Buffett was asked, if he were coming into the investment field today, what areas would you tell him to point himself in?

Buffett: “Well, if I were doing – if I 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 (interviewer): But there’s 27,000 public companies.

Buffett: “Well, start with the A’s.”