DIY Investor Diary: shifting from 25 holdings to 50
An individual investor worried he was too diversified until events proved the opposite.
15th July 2026 11:32
by Dave Baxter from interactive investor
There are many investment philosophies out there. And while they can be useful, inevitably some can contradict each other.
Take the idea of portfolio turnover as one example: we were once told that buy and hold was the most principled approach, but now even some of the best-known investors are embracing greater churn.
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On a different note, there’s the concept of diversification. Specialists would agree that this is a good, and in fact truly essential, trait of a portfolio. But pinning down how much diversification is enough – and how much is too much – can be elusive.
That has been the experience of one ii customer, who has around £100,000 in a Stocks and Shares ISA. Only 44 years old, he is happy to take risks and chase portfolio growth over the long run, provided he can mitigate the risks by following the classic core/satellite investment approach.
For him, that means having the bulk of his ISA assets in steady, dividend-paying FTSE 100 constituents that shouldn’t face too many existential woes. Think BP (LSE:BP.), GSK (LSE:GSK), Shell (LSE:SHEL), Rio Tinto Ordinary Shares (LSE:RIO), Glencore (LSE:GLEN), Standard Life (LSE:SDLF), Aviva (LSE:AV.), Barclays (LSE:BARC) and Legal & General Group (LSE:LGEN). As the lengthy table at the bottom of this article shows, many of these account for a chunky proportion of the portfolio.
Elsewhere in the portfolio he’s happy to take some risk, backing smaller companies and accepting that some of these can go to zero. A case in point is gaming stock Gfinity (LSE:GFIN), which has lost some 99.9% of its value. Iomart Group (LSE:IOM) and S4 Capital (LSE:SFOR) are among his other bombed-out names.
However, he is happy to ride it out with such companies, and has had some major successes such as Rockhopper Exploration (LSE:RKH), which has returned more than 400% over the customer’s holding period.
Having gotten into stock picking via an investment scheme with an employer around 15 years ago, he has grown convinced of the merit of sticking with riskier satellite positions – meaning some will play out even if others could go to zero.
“If I lose £1,000 on a little stock it’s fine because the main portfolio grows,” he says. “I don’t see it as a game but I like to play around – just not with the bulk of my capital.”
That’s something other DIY investors have found, and a philosophy that can develop for those who stay the course. But this customer has started to challenge his own assumptions when it comes to how much diversification he needs.
Too many stocks, or not enough?
Making an investment is an exciting prospect, and it can be easy to end up with more holdings than you can effectively monitor.
There’s also the prospect of “diworsification” where we end up with too many holdings, dilute our market exposure and (by some accounts) build an expensive tracker fund.
Perhaps with some of these concerns in mind, the customer had planned to prune back his portfolio at the start of this year, from having around 40 holdings to roughly 25. In theory this would include 10 of the core names and 15 satellite positions.
However, he has had a change of heart. 2026 brought war in the Middle East, and the sheer variety of sector exposures in the portfolio helped him to ride out the market volatility that accompanied it. That has convinced him to go in the other direction and now add a few more holdings.
“At the start of the year, I wanted to reduce the number of different stocks from 40 at that stage to 25 but found with the war that my diversification was my strength and subsequently increased my number to 45 currently, with plans to have 50 different shares by end of the year,” he said.
“These [new holdings] will mostly be very risky, high-growth potential small shares that I’m currently researching through my social media channels to see where the next big price action will be.”
From war to social media
Readers will notice that this investor’s portfolio is largely restricted to UK company shares, with the odd fund thrown in to cover areas such as gold and China. They did once own some American shares but tired of this because of the additional complications this can involve.
Instead they focus on companies that have “global reach”, and like UK-listed shares in part because they can be easy to liquidate quickly if needed.
Much of this investor’s recent thinking has been coloured by conflict in the Middle East. They had a big position in gold via the BlackRock Gold and General A Acc (0585239) fund, one they had held for years and that had performed extremely well.
That has had a volatile year, given that the gold price enjoyed a hot streak but then, surprisingly, hit the buffers after war broke out, likely because investors decided to take profits on a winner from their portfolio. This investor, needing to free up some cash for a house move, decided to take profits.
“I thought I should hold it because gold rises in war. But then the opposite happened,” he says. “I could see this war dragging on so liquidated that position - I made a tidy profit on that.”
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The war has also led to a focus on names such as Tullow Oil (LSE:TLW) in the expectation that, with more trouble ahead in the Middle East, the global oil price could rise once again.
Every DIY investor has their own way of researching stocks, and this individual likes to follow company updates and news for a given business.
“If I’m interested, I’ll do a deeper dive and do some sector-specific research, look at who the key players are,” he says.
The research process will also involve looking at a company’s financial statements – although as many will know, things get murky when it comes to small-cap stocks.
“A lot don’t tell you the truth, especially with smaller companies,” he says. “I use social media and other alternative sources of information.”
When investors talk about using social media to inform their investing, the assumption might be that they are looking for stock tips on social networks.
But this investor takes a different approach, instead examining a company’s social media presence as a way of learning about the business.
“Social media is quite helpful,” he says.
“LinkedIn is good to see how active the company is in posting and how many employees there are.
“Instagram is good as well. It shows things like employee engagement, if they have an office party and so on. Some companies are active on social media and you see a vibe, pick up on employee morale and those sorts of things.
“Financials is a lagging indicator but this tells you the current status of a company. People don’t have parties or go on retreats if the company is under water.”
Past performance is not a guide to future performance.
In our DIY Investor Diary series, we speak to interactive investor customers to find out how they invest in funds and investment trusts, what their goals and objectives are, current issues and concerns regarding their portfolio, and what they’ve learned along the way. The aim is to provide inspiration for other investors, and we would love to hear from more people who would like to be involved. We do not require those featured to be named. If you are interested, please email our senior fund content specialist directly at: dave.baxter@ii.co.uk
AIM stocks tend to be volatile high-risk/high-reward investments and are intended for people with an appropriate degree of equity trading knowledge and experience.
Important information: Please remember, investment values can go up or down and you could get back less than you invest. If you’re in any doubt about the suitability of a Stocks & Shares ISA, you should seek independent financial advice. The tax treatment of this product depends on your individual circumstances and may change in future. If you are uncertain about the tax treatment of the product you should contact HMRC or seek independent tax advice.
These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.
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