 Good day fellow investors. How many stocks should you have in your portfolio and what should be the maximum exposure? This is a great question that came from Fabian. Sven, would you mind doing a video on portfolio allocation? Allocate enough of the portfolio not to over-diversify and have a positive impact in case of upside, but not so much to avoid catastrophic loss. Is 10 to 15% max of your portfolio value what you have been using in your pair's personal portfolio? So this is such an important question because you have to eliminate the problems that might come from a fixed, unflexible investing mindset and on the other hand have some structure to lead you to whatever might happen in the stock market. Usually a stock goes up 50% and falls 33% during a year. That's normal. That's the stock market. Even the biggest companies do that like Apple. So there will always be big changes in your portfolio, especially if you have a small number of stocks. Now you can decide, okay Warren Buffett says that diversification is for fools, however on the other hand Peter Lynch always had more than 50, 100 big positions in his portfolio and another 100 small positions. So first decision is okay, what's my strategy? Am I going to focus on a few great businesses, great value investments and I'm going to be sure, especially if it's value investing it's much easier then you know okay I'm going to get the return eventually so you can have a smaller number of positions. If you're more like Lynch that follows the market, follows the earnings, follows the trends, follows what's going on, tries to find those undiscovered gems then you might say okay I'm going to have 100 positions because if of those 101 is the next Amazon then I will get a 200 bagger out of just that one stock that will cover for all the portfolio. So first what you have to decide is what's my strategy? A lot of stocks and then I'm going for the jackpot, 25 baggers or something or just a few carefully analyzed assessed risk reward investments and then you go with a lower number. I am not so much inclined into Lynch I like his strategy but I like to apply also that strategy on my five to seven ten holdings. I think with the number of holdings I will go up to seven and when I come to seven and currently at five still researching then I'll use John Templeton's advice to sell only when you find something 50% better. So if I find something in my research that's 50% better than my seventh holding I might replace that holding with this new one. This will really focus to put quality quality quality into the portfolio and the more quality I put during time into the portfolio some will be taken over, some will explode in price, some will be very bad as there is something that I didn't see which is normal in the stock market and then I'll manage the portfolio and here I want to say managing a portfolio is a process therefore you shouldn't have a fixed mindset. So I would say see what's your strategy, have I don't know seven stocks, ten stocks, 150 stocks or 100 like Lynch but then don't have a fixed portfolio exposure. Many say okay I'm going to have maximum 13 or maximum 10% of my portfolio exposed to one stock and I think this is a big mistake because that one stock might be really really good and you want to just let it grow over time, let it pay you dividends and it might be coming at some point in time 10, 20, 40% of your portfolio and if you know it's still good why would you sell even part of it because you are selling the good in order to buy something worse and this is something you have to see. So okay have a set number of positions in your portfolio but be flexible with the exposure that's my message and I'm flexible with the exposure I hope that some of my current portfolio holdings fall 50% so that I can put 20-25% of my portfolio in it because when then I compared value investing risk, the risk of permanent capital loss over the long term I know that it is minimal and I can have 20-20 something percent of my portfolio in a stock because I know that okay the yield then business yield should be above 15% close to 20 which relative safety a good business and then I'm happy to go even higher. I used to have also 70% of my portfolio in one stock in 2009 didn't have much time to look at stocks but I found something good put 70% of it became a five-beggar and I did really really well. So on how much cash you should have in your portfolio Registratia asks is cash still a king? So after this video about currencies the potential the practical loss the definitive certain loss of what currencies bring over time he wants to buy assets real estate commodity stocks goals etc but everything looks so expensive now true to according to video all these assets inevitably will be more expensive so he's confused my simple answer when it comes to cash is when you find investments that give you a decent return on investment in relation to the risk for your investing appetite you invest when you don't find them you don't invest and over the past year I have found six such investments that satisfy my investment criteria give me a good return and if there is a recession of course I will bleed but in the meantime I will do well with nice dividends a nice return so it's not about a certain level of cash you should have in your portfolio it's all about the risk and reward of what you can find my lump sum portfolio is 60 percent 65 percent invested now and as things go along if I find more such opportunities a little bit diversified across the world I might even go to 80 percent and 20 percent I'll always leave for short-term volatility to take advantage of the short-term volatility that always arises especially if you own eight stocks and that's it whether there will be a recession many expected the crisis in 2012 and have been out of the market out of stocks missed on what seven years of dividends seven years of business growth etc so on cash it's about your personal situation do you need the money to buy something or it is about the risk and reward the message is the conclusion have a fixed number of stocks in your portfolio because this increases your sharpness allow for flexibility in the portfolio exposure if something is good 25 percent 30 percent no worries if something is bad you try to put it out replace it with something good and that's what the portfolio positions allow you but be flexible there because really assess the risk and reward of each investment the quality of it and then see where it leads you as I said portfolio managing is a long-term process thank you for watching looking forward to your comments and I'll see you in the next video