At the Extraordinary Future Conference in Vancouver last week, Ryan Irvine of Keystone Financial said that investors who have 10 to 20 stocks in their portfolio get much better returns.
At the Extraordinary Future Conference in Vancouver last week, a Keystone Financial presentation suggested that an investor’s portfolio should have no more than 10 to 20 stocks.
Keystone, a company engaged in independent research on individual companies that are sent out to its clients said that investors with a ‘focused diversification’ of 10 to 20 stocks in their portfolio get much better returns.
Irvine highlighted several reasons for these picks but noted key reasons like a “strong balance sheet” and “low relative valuations” remained consistent among the recommended companies.
“We are here to make money,”Irvine told the audience. “I do like to educate people and I think an educated investor is a better investor.”
Further, Irvine said investors can often find companies that are a “great business,” but if they don’t buy it at the “right price” then they wouldn’t make money in the long term.
“In the market, its all about returns and not about how [attractive] your investments are,” Irvine said.
Irvine also highlighted stocks that had the highest return in the last 10 years on the Toronto Stock Exchange, a stock that increased the most year-to-date and a stock that performed the worst so far in 2018.
According to Irvine, Boyd Group (TSX:BYD.UN) has had a 5,700 percent increase in the last 10 years and is the best performing stock on the TSX in the last decade. Irvine said that if someone invested C$20,000 in Boyd Group in 2008, that would result in C$1.14 million returns for an investor in 2018.
“What does this company do? They fix cars, automobile repairs,” Irvine said. “Not [exciting] at all but the returns matter.”
Furthermore, Irvine highlighted XPEL Technologies as the best performing stock on the TSX Venture in 2018 with the company having returns of over 390 percent.
On the other hand, HIVE Blockchain Technologies (TSXV:HIVE) was picked as a stock that had the most negative returns in 2018, with an 82 percent loss.
In the presentation, Irvine said that while there is significant interest on the blockchain and cryptocurrency verticals, none of the companies Keystone researched were profitable. Irvine said that HIVE is not alone in the sector in terms of negative returns.
In a sector breakdown, Irvine said that Keystone looked at 14 blockchain-related stocks in North America, five of which are traded in US with nine traded in Canada. Irvine said that none of these stocks pass Keystone’s investment criteria.
“The entire segment..is down on average 75 percent this year,” he said. “HIVE is down 82 percent and that is a great way to destroy your capital in the long term.”
Irvine said that investors should look at stocks as if they’re business and that that’s the way to invest in the long term.
“Make sure there’s a profitability as a minimum criteria from operations. We believe that’s a way to look at the business,” he said.
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Securities Disclosure: I, Bala Yogesh, hold no direct investment interest in any company mentioned in this article.
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