Ask HN: Should one diversify their stock portfolio

2. Realize that stock picking is a fool's errand

3. Buy ETFs

I'm 100% invested in XEQT.

I cannot say the same about say, agriculture, food or musical instruments.

So yeah, we have some kind of edge here.

As to whether you should diversify, there's really no right answer and it depends largely on your risk profile. Less diversification will typically provide better returns at the risk of greater losses. If you're really confident you know what you're doing arguably less diversification is better. More diversification generally means lower returns, but you'll also be less likely to get wiped out in the event of something like a dot-com bubble. With tech valuations being as high as they are today, it probably wouldn't be a bad idea to have some diversification outside of tech.

If you decide you still want to hold individual stocks and also want more diversification you could split your portfolio 50/50, with 50% in index funds and the other 50% in some individual companies you really like. Alternatively, you could pick some solid blue chip stocks to add to your portfolio. Stocks like BRK.B and KO are IMO great stocks to hold if you want some safe and steady returns.

Whatever you do you should be prepared for a worst case scenario. Over the last year or so I've warned people repeatedly that stocks like TSLA could lose up to 90% of their valuation and potentially never reach new highs if market conditions change. If you're portfolio is full of stocks with a risk profile similar to TSLA it's really just a matter of time before you get wiped out. Having 10% exposure to a stock like TSLA isn't necessarily a bad idea, but a portfolio full of stocks like TSLA is a guaranteed way to look like a genius until the market changes and you lose everything.

Another thing to remember is that every company goes to 0 eventually. Today I see a lot of people speak about tech companies that have only been around for a decade as being "long-term holds". Historically this isn't true. If you don't believe me just look at the largest companies in the world from just a few decades ago. If you're holding individual stocks you need to be occasionally repositioning your portfolio to reflect changes in the economy. This means you'll be paying more tax than if you just held an index fund over several decades so you also need to factor this in.

My guess is that the fact you've asked about diversification suggests that you probably do need to diversify a little.