Post: Portfolio Strategy - Diversified or Concentrated?
Both are excellent strategies for people who know what they are doing. Since a newer investor may have the risk of capital erosion in the early stages a diversified portfolio “might” make more sense. There are models which tell you minimum x number of stocks, then others that will tell you if you buy over x number of stocks then you have removed any benefit of buying stocks and will not get a good return.
You will hear many arguments in favor of each strategy. I will offer a simple comparison…
A. There is a saying by Warren Buffett “Diversification is protection against ignorance. It makes little sense if you know what you are doing.”
B. There is another fellow called Peter Lynch who is as fabulous an investor as Warren Buffett and he held a extremely diversified portfolio of at one time up-to (if I remember correctly) 1500 stocks. The running joke was Peter Lynch never met a stock he didn’t like.
The fact is, holding only 2 stocks does not make you a better investor than if you are a person holding 30 stocks or for that matter 200 stocks, if you can handle owning 200 stocks without going crazy that is.
For example, From the Nifty 500, around 200 stocks double every year. Which 200, no one guarantees; so a lot of stock movement is sometimes random too based on positive or negative sentiment, stock or industry specific news which no one knows in advance, but which will come all year round, and so many other factors.
There is no need to stress on achieving a concentrated or diversified strategy. It might actually be a product of the number of concurrent opportunities available or a risk tolerance profile that you find out you have.
With relevance to India, reading this slightly old article on a Mrs. Maheshwari might be interesting. She is India’s Peter Lynch; or more appropriately since she did it first, Mr. Lynch is America’s Mrs. Maheshwari 
So go with a strategy you are comfortable with, concentrated or diversified. There is no right answer really.
And yes, we know if so diversified then one can go to a mutual fund. That too is an option, this is a discussion only for people who want to attempt direct equity investment.