There have been many debates around diversification of a portfolio - some advocate limiting to 3 or 4 counters, whilst others have advocated a wide holding of counters.
The essence is what is your strategic imperative in your portfolio do you 1) just want to beat inflation 2) derive dividend streams 3) pursue growth 4) just keep your funds safe 4) create a nest egg for when you reach a certain age.
Your objectives around that portfolio need to be crisp and achievable and must have an end goal - mine is very simple - if I die ahead of my wife my portfolio will more than adequately replace the loss in pension she would suffer upon my death - even if she liquidated the entire portfolio and invested in a simple fixed deposit
My present portfolio has 22 counters in it and is spread across different sectors of the economy, and what it does for me may not necessarily work for others. Within the portfolio I have a DBX tracker fund (EU - not performing as expected) and a Satrix fund (Indi which is doing well). 66% of my portfolio is spread across foodstuff manufacturing, supermarkets, food and clothing, and a diversified conglomerate - I have 4% in resources and 3% in fund managers and about 4% in rats and mice and speculative shares, and 5% in Vodacom (this investment is set aside though for my wife so that she can replace her aged car when she needs to)
So my portfolio is structured to ensure that within one of the sector or even maybe in more than one sector I get growth whilst the others lag, due to constraints in the economy
So as you will note I am an advocate of diversification, but, will admit that over diversification can result in the difficulty of managing too many balls at once - what is over diversification well that's a personal issue, but presently I can manage my 22 counters comfortably - but that's because I can give my portfolio adequate time per day
