I now have 15% of my investments in HP. But HP is the only individual stock that I own. I can own this much and sleep at night. Also I am able to go out of town for a couple of days and not check to see how it has moved. I can't say that about others that I have owned in the past.
I've been a holder since last Oct., in the low 20s. I just reduced my position by 1/2 on Friday. So I'm still long HP but decided to take some $$$ off the table. I did the same with RDC, except I liquidated my whole position there. Just a feeling I get that this market is a bit too overextended at this point...
Hypothetical (and extreme) situation: You invest all in one stock, and 4 times in a row pick a stock that doubles, but the 5th time, you pick one that goes bankrupt. You have zero dollars.
Alternative: You invest in 5 stocks at once, 4 of them double, one goes bankrupt...you're doing very well.
I currently have 5 stock positions, one option position, and 4 stocks that I'm looking to get back into if the price is right. All of those companies are in different sectors to protect against a major downturn in any one area. (toys, clothes, robots, shipping, drugs, electronics, etc.) HP used to be my largest position but unfortunately is now one of the ones I'm not in but looking to get back into...I needed the money for something else when it hit 29, but have some free cash again. ASPV is my largest, a drug company with a 6.45 PE, 4.82 forward PE, lots of cash, no debt. It's so cheap because they only have one product and the patent on it runs out in 2 to 3 years, but they're busy negotiating new deals.
You can make money plenty fast with half a dozen stocks and since different ones are doing well at different times, you're often not stuck with more than one or two dogs at a time.
It certainly is a dangerous way to invest. Your hypothetical situation almost exactly mirrors my actual situation.
In 2003 I got tired of boring mutual funds and decided to make a big bet on a stock. Enough that it would be interesting but not enough to hurt my family if the stock went belly up. Was in the right place at the right time and it tripled in 6 months. The anohter double in ~ 10 months. Next one doubled in a year. Kept "doubling down" and the next one doubled in 9 months.
Then I made my mistake. Put it all in a really small LCD manufacturer that I thought could triple in the short term. Didn't do my normal ~ 3 months of DD. Bought the hype of a young, slick (and ultimately stupid) first time CEO. I "lucked out" in that the company got bought by FLEX for basicall my cost basis. It was dead money for a year, but with that moron at the ehlm I easily could have lost a lot.
So I obviously was a little gun shy and got a LOT more conservative with HP. But I love my decision more and more each day.
I have HP as my only holding in my trading account (primarily options) and it is 1/3 of my holdings in my IRA. Last fall I was holding AA and CAT in my trading account but decided to go all in with HP in December.
My strategy is to hold three stocks. Each comprising roughly 30% of my portfolio with the additional dog/s (losses to offset long term gains) I am waiting to sell or a real spec play stock ( all making up less than 10%). Of the three stocks (30% ea), HP is my most conservative, followed by a moderate risk and lastly the third I monitor closely (stop loss) b/c it has inherent risk / high potential. So far, my method works for me, but to each his own. Good luck. With HP you picked a gem, and the likelihood of it turning is always there but slight. What is your exit point from HP?