Retail Investor's Perspective
Continuously monitoring and embracing the need to open and exit positions as needed should have resulted in the shares of at least some of these companies being sold closer to their highest share price and repurchased later at a lower price. CGC’s recent acquisitions resulted in a strong presence in the Hemp industry along with a clinic network and these additions by CGC may warrant the holdings/weightings of other companies held to be revisited. The example portfolio assumed an equal dollar investment in each stock however each Retail Investor has a different bias, risk tolerance, and time horizon and the weightings would reflect that. It is also possible to sub-diversify. For example, holding shares of two to four different Licensed Producers each catering to a different consumer base. But take caution as it is easy to become over diversified especially within one industry. Prevailing portfolio theory suggests optimal diversity is achieved with 18-22 stocks when the market index is the benchmark. "Modern Portfolio Theory and Investment Analysis", written by Edwin J. Elton and Martin J. Gruber, concluded “the first 20 stocks reduced the portfolio's risk by 29.2% … additional stocks from 20 to 1,000 only reduced the portfolio's risk by about 0.8%”. Intentionally over diversifying for the reasons given earlier needs to be factored in where warranted.
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