Private Investor: Diversity is the secret of my success

What to do with the laggards? Most of my portfolio has kept up with the general, very impressive upturn in the market. Part of that is down to my incredibly successful stock picking (I'm joking, by the way); much more is down to the shares I own being so many and varied that it's difficult not to do as well as the market, although, by the same token, it's also hard to outperform it.

I remember reading once that if you have invested in something like 10 different and reasonably varied shares, you've pretty much reached the limit of reducing risk through diversification. In other words, it isn't much more risky to own, say, 10 or 12 equities than if you held 100 or 200.

So, provided you have the resources, it's not that difficult to build up a portfolio that is actually safer than you might think, given the usual risk/reward balance associated with equities. If you've got one privatisation share, say, and one demutualisation share, it wouldn't take much for you to add a few more through a cheap online broker. The upside is that you don't pay the usual charges you might with an investment trust or other collective fund of a tracker, although you'll probably achieve much the same returns. The downside is that you can be unlucky.

Anyway, you are bound to have some laggards. My particular problems are Vodafone and BSkyB.

I have dealt with the Vodafone issue by selling down some of the shares. It is amazing how badly Vodafone has fallen behind almost every other blue-chip stock. It's getting a particularly bad press at the moment, and there doesn't seem to be a clear enough corporate strategy for dealing with its difficulties in America and Japan.

I still hold quite a few of the shares, however, in the hope that even Vodafone can't lag the market forever, but I'm inclined to sell some more soon, maybe on what passes for strength in the share price these days, ie anything above 130p.

The other laggard is BSkyB. This was a straight punt on the sedentary tastes of the great British public, whose appetite for paid TV and football never ceases to amaze me. I actually know people who are happy, indeed proud, to spend £1,500 on a gigantic telly screen.

High-definition TV is the new must-have thing, I'm told, and BSkyB is an early adopter of the technology, which should be ready to broadcast very soon. BSkyB also had a reasonable outcome from the raffle of Premiership football rights. Not as good as it once was (ie a monopoly), but probably enough to keep me from selling my BSkyB shares. Trouble is, they just don't seem to be going anywhere, when even newspaper-company shares are showing signs of life.

Perhaps the great advantage of being a shareholder in BSkyB should be that your fellow-shareholders include Rupert and so many other members of the Murdoch dynasty. Thus, you would think, there might be some emphasis on achieving excellent results for the shareholders. You might think that Rupert might have a word to that effect with his son James, who runs BSkyB. Maybe he has. But there has been little sign of it in the share price.

I'm sticking with BSkyB for now because I reckon that innovations such as high-definition technology, the "gnome" portable audio box, and the company's broadband ambition should see it through in the medium term. Here's hoping.

One share that never stops rising is Savills, which I always call a posh estate agent, but which is in fact a posh estate agent with a growing wealth-management business attached, with interests in the UK and Hong Kong. I have been in and out of the shares for almost 10 years, starting when they were at about 130p. This week, they hit yet another all-time high of £13.30 and show no signs of slowing down.

Indeed, even at those levels, the shares can still be considered cheap on some measures. Given the number of the super-rich seems to be rising inexorably, Savills would seem to be a good way to gain some exposure to this phenomenon. Even if I'll never join them, it would be nice to get a sliver of their action.

s.ogrady@independent.co.uk