Investors shoot themselves in the foot when they own too many stocks. I realized that my portfolio was too large during my annual portfolio analysis.
Holding 15 stocks is more work than I wish to devote to my portfolio. As a general rule, I contribute at least 1 hour per week reading up on news, forecasts, and other information for every stock I own.
Managing a portfolio of 10 or so stocks would be much easier, so one of my last-minute goals for 2007 is to trim down my holdings a bit. I prefer the 8-10 holdings range because it requires less time devotion.
I can spend less time managing my portfolio while maintaining diversification throughout the market sectors.
The following are possible synergies that I've pondered:
Bank of America (BAC) and Barclay's (BCS)
There were rumors floating around wall street about a Bank of America and Barclay's merger. A merger would be a great way for Bank of America to expand their international banking reach. If Bank of America bought out Barclay's, that would eliminate the need to sell my Bank of America stock in exchange for more Barclay's shares.
Staples (SPLS) and Gap Inc. (GPS)
These retail stocks are both “stuck in the gutter” so to speak. Gap is a long-term value stock, but their moat is under heavy attack from comparable casual clothing retailers Abercrombie (ANF) and Aeropostale (ARO). Unless Gap can combat their weakening competitive advantage with alternative sales ploys and a larger range of product merchandise, Gap Inc. margins will continue to shrink.
Staples stock is my growth play on the growing commercial office industry. I'm behind in my research on Staples at the moment. I'll provide an in-depth analysis later this week.