How many stocks does he believe an investor should hold for adequate diversification?

Okay, here is the direct translation of the content into English, maintaining the markdown format:

Benjamin Graham's View on "How Many Stocks to Own"

If you read Graham's classic work The Intelligent Investor, you'll find he offers a very specific suggestion. Broadly speaking, he believed that an average investor, to achieve adequate diversification, should hold around 10 to 30 stocks.

This number wasn't arbitrary; it stemmed from his deep investment philosophy. We can understand it from two perspectives:

1. Why at least 10? — To "Don't put all your eggs in one basket"

This is quite straightforward. Imagine if you put all your money into just one or two stocks. If one of those companies experiences a "black swan" event (like accounting fraud or its core product becoming obsolete), your portfolio could suffer devastating losses.

One of Graham's core tenets is the "margin of safety," essentially meaning ensuring you don't lose significant capital first and foremost. Holding more than 10 stocks means that even if one or two perform disastrously or even delist, you won't be wiped out. The stable performance of your other stocks can help absorb this risk. It's like a table with 10 legs: if one breaks, the table wobbles but doesn't collapse.

2. Why not more than 30? — To "keep it manageable"

This is a crucial, yet often overlooked, point in Graham's philosophy. Why wouldn't he recommend buying 100 or 200 stocks? Isn't spreading things out more safer?

The reason is that Graham's investment approach isn't about buying blindly. He requires investors, before purchasing a stock, to research the company like an owner – studying its business, financial health, management, and intrinsic value. This demands significant time and effort.

Limited Capacity: For an average person (even professional fund managers), it's nearly impossible to gain a deep understanding and consistently track over 30 companies. When you own too many stocks, your knowledge of each one diminishes significantly, turning "investing" into simply "collecting stamps."
Diminishing Returns: Studies show that the risk reduction benefits of diversification are very significant when increasing stock holdings from 1 to 10 or 20. However, adding more beyond 30 (up to 100, for example) yields diminishing diversification benefits. Meanwhile, the management cost (time and effort) increases substantially. You might end up buying mediocre companies you don't understand purely for the sake of diversification, which could actually drag down your overall portfolio returns.

Key Point: Quantity Isn't King, Quality and Non-Correlation Are

By emphasizing this numerical range, Graham was conveying a deeper message:

Avoid Concentration: Owning 15 stocks all within the tech sector isn't diversification; it's creating a "cluster bomb." If the sector faces cyclical issues, your stocks will likely all fall together. True diversification means spreading your stocks across different industries and types of companies. For instance, include some consumer staples, some healthcare companies, plus some industrials or financials.
Ensure Understanding: Each stock you hold should be a "quality asset at a bargain price" – meaning its price is below your calculated intrinsic value, based on your research.

Understanding This Advice Today

In Graham’s era, index funds (ETFs) didn't exist in their current convenient form.

For most average investors today who lack the time or bandwidth to research 30 companies, an excellent alternative—completely in line with Graham's principles—is to purchase low-cost index funds.

For example, buying a CSI 300 Index Fund gives you immediate exposure to 300 of China's most representative companies, achieving excellent diversification at a very low cost, with zero need to research individual stocks.

To summarize:

For investors wanting to pick individual stocks, Graham's "10-30 stock" rule remains valid wisdom. It strikes an ideal balance between "sufficient risk diversification" and "individual management capacity."

However, for the majority of ordinary people, understanding his underlying principles of "diversification" and "safety," and then opting for a simple index fund, is likely the smarter approach.