That is the basic rule. You do not want to create an inordinately bulky portfolio of too many stocks. While there is no hard and fast rule about the number of stocks you should hold, your core investment portfolio should not cover more than 20 stocks. There are two distinct reasons for that. Firstly, your portfolio is something you should be able to monitor consistently and in detail. Monitoring your portfolio is all about monitoring industry trends, global macros, news, F&O data, volume shifts, advance declines, quarterly results, order book position etc. This kind of detailed monitoring is well-nigh impossible if your portfolio is too bulky. Secondly, your core portfolio is also supposed to offer in-built diversification. According to empirical studies, 13-15 stocks in any portfolio can realize the full potential of diversification. Anything beyond that number only leads to substitution of risk and not reduction of risk. Hence, the smaller your core portfolio the better!