Bichon Frise wrote:
the point of systematic and unsystematic risk is...The number of stocks in various sectors to be diversified is often debated...
Yes, I agree. My 4% number comes from wanting to hold at least 25 (uncorrelated) stocks. The standard deviation of an uncorrelated portfolio goes down with the square root of the number of stocks. 16 stocks=1/4 the standard deviation, 25=1/5. The expected (mean, average) return is not changed by the number of stocks. So holding just a few stocks exposes one to variation that is easily avoided with absolutely no benefit in terms of expected return.
The exact number is certainly debatable but somewhere around 20-30 is about what you want. If you hold a bunch of low beta stocks or some with negative correlation then I'd also be more comfortable with a smaller number. But those don't apply here.