Marcus Padley's "One-stock portfolio"
Here’s a unique test for investors: If you had to sell your 20-stock portfolio and keep it all in just one of the stocks, ask yourself which stock it would be? While we’re not supposed to have favourites, everyone does, and most people can nominate their one stock without pausing for thought.
Marcus Padley threw me a curveball by posing this unusual theoretical question during our video interview recently. To be clear, he’s not advocating that investors should hold just one stock, just thinking about which stock it would be.
His point is that investors are usually deeply informed about the stock that they select. Marcus then explained how answering this question quickly reveals a critical flaw present in most portfolios, before then offering a simple solution to remedy it...