The FIFA World Cup is now in full swing, sadly the Socceroos were undone by a poor decision and lost.
I am obsessed with shares, so I couldn’t help thinking about comparisons between how a good soccer team and a good portfolio have similarities.
You should only have your best share ideas in your portfolio like Altium Limited (ASX: ALU) and REA Group Limited (ASX: REA), just like countries should only take their best players. There’s no point including your 75th best share idea or player into the group.
Next, you want your best players to have more of the ball because they have the best chance of scoring. There’s a reason why Cristiano Ronaldo gets a lot of Portugal’s possession – he is the best player! You need to allocate more of your portfolio to your best ideas and your less-good ideas should be smaller positions. That’s why Challenger Ltd (ASX: CGF) is one of my biggest positions.
It’s also a good idea to mix up your portfolio by having shares spread across different industries. Having most of your portfolio devoted to bank shares like Commonwealth Bank of Australia (ASX: CBA) and Westpac Banking Corp (ASX: WBC) means all of your portfolio has the same risks. In soccer it’s a good idea to have players with different specialties and different heights – if all your players are around five foot then taller teams can just kick it high into the air.
It’s impossible to know which team or which share will do best, but if you pick a group of quality choices then you’re more likely to be a winner than a loser.
These top shares could all be some of the best picks for your world-cup winning portfolio.
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Motley Fool contributor Tristan Harrison owns shares of Altium and Challenger Limited. The Motley Fool Australia owns shares of and has recommended Challenger Limited. The Motley Fool Australia owns shares of Altium. The Motley Fool Australia has recommended REA Group Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.