·         Club Portfolio Clinic

o   Diversify by Sector  (as classified by Morningstar and StockCentral)

§  Basic Materials

§  Conglomerates

§  Consumer Goods

§  Financial

§  Healthcare

§  Industrial Goods

§  Services

§  Technology

§  Utilities

o   Diversify by Company Size (Revenues, not capitalization – as classified by StockCentral)

§  Micro                    Less than $100 million

§  Small                     Between $100 and $500 million

§  Mid-sized            Between $500 million and $5 billion

§  Large                     Between $5 billion and $50 billion

§  Mega                    Greater than $50 billion

The rule of thumb is that our portfolio should focus on mid-sized companies, having about 50% of our portfolio there.  Add 25% micro and small, and the last 25% in large and mega.  This gives us a good mix of some higher-growth small companies, slower-growth blue chip companies, and the remainder somewhere in between the two.

o   How many stocks?

The experts seem to agree that 1 or 2 per person should be the rule.  That would cap us out at 16 if we have 8 members.  Having that number of stocks, and rebalancing our current portfolio by replacing some companies, would help us reach our diversity goals.