That said, ensuring one’s portfolio is well-balanced is a prudent idea. Having too many eggs in one basket, even a really good basket, could turn out to be problematic if things happen to turn sour with that one particular company.
One might start by putting a balanced amount into each stock – 5%. Over time, some investments will vastly outperform others, and all of a sudden one stock might make up 15% or 20% of the portfolio. Trimming that back and adding to the other great stocks one thinks will bounce back, or adding a new position here or there, could enhance returns over time.
Setting a limit (maybe 10%, maybe higher for those with more aggressive growth portfolios) helps to keep the diversification one sought to achieve alive.
Invest wisely, my friends.