Too many eggs in 1 basket? How to diversify while owning just a few stocks

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In this Investing Club mailbag, we explain how individual investors can keep their portfolios manageable in size while remaining diversified.

Here's our Club Mailbag email investingclubmailbag@cnbc.com — so you send your questions directly to Jim Cramer and his team of analysts. We can't offer personal investing advice. We will only consider more general questions about the investment process or stocks in the portfolio or related industries. This week's question: I thought Jim mentioned having around five stocks in a portfolio with no more than a 5% holding in each stock.

This week's question: I thought Jim mentioned having around five stocks in a portfolio with no more than a 5% holding in each stock. But if you only own five companies, the numbers would dictate $100,000 or $200,000 in each stock, respectively, if you have $500,000 or $1 million of discretionary money to invest. That's a lot of eggs in a few stocks, but you can't handle tracking more than 5 stocks. Thank you in advance for the clarification.

 

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