Failure to follow my basic rules

I'm no day trader.  I have a career to focus on.  So the purchases I make are planned to be long term investments (12-18 months minimum) typically.  I currently hold 7 positions and started creating them in January of 2010.  At this point, I already missed out on the huge gains from the generational lows, but I finally felt comfortable with my own finances that I could put money to risk.  As of today, I hold positions in 7 stocks - C, BWEN, DE, HON, ONNN, PEP, and ECA.  Taking this as a moment to reflect on the past 22 months, there's a lot to learn about myself and investing. 

My portfolio didn't add C or DE until 2011, so let's focus on my portfolio from the perception of the initial 5 (HON, ONNN, PEP, ECA, and BWEN).  I believe in a diversified portfolio.  I also liked the idea of having a little speculation - I'm still relatively young, plus I love the idea of trying to get a big turn around (doesn't everyone wish they bought AAPL back when it was at $5 - or even when it was in the 90s just a few short years ago?).  Looking at my starting portfolio, I can see that it's likely I made at least 1, if not 2 mistakes. 

Mistake number 1 - too much speculation.  The idea is to speculate some of your portfolio, not a lot of it.  Both BWEN and ONNN can be considered speculative plays.  I consider 2 factors for speculation - 1) Is the market cap low (less than 1B)? and 2) Is the stock under $10.  Both of these stocks were in the Single digits at time of purchase and based on cost-basis, and BWEN is < 1B market cap too.  If the two of these stocks combined were only 20% of my portfolio, I'd have been in better shape, however, it was closer to 40%.  That's failing to follow my own discipline and can be a costly mistake. 

Mistake number 2 - Not diversified enough.  This may or may not fully be a mistake.  There's a number of ways to look at this and I'll describe some of my thought processes here.  I haven't decided if I truly did something wrong here, or whether I just could've made better picks.  When I originally looked at my portfolio, I had 2 thoughts that made me believe I was diversified.  The first thought was that ONNN wasn't a speculation, it's just a tech company.  Thought number two was that BWEN wasn't an energy play, it was a speculation play, and therefore I could get away with having 2 stocks in the same sector.  When you're trying to maintain a portfolio of 5 - 7 stocks, I'm starting to think that having more than 1 play in the same sector is WAY too much risk to allow for speculation in a sector you already own.  This market has been a little odd in the last year in particular.  Oil has been relatively strong until the last few months, while nat gas and renewable energy have just been dogs.  ECA is a nat gas play, BWEN is renewable energy, so clearly, I made some bad picks from the energy sector considering the unrealized losses I've currently undertaken.  Had I 2 plays in the oil side of energy, I'd probably feel much better about what I had done. 

As you can see from my opening comments, despite these mistakes, I haven't corrected anything yet.  I did actually sell a portion of ONNN at one point so my speculation isn't near as much of my portfolio as it once was, but I still have work to do with ECA and BWEN.  I have my reasons for holding yet, though - be they smart or stupid.  I'll save that for when I start talking about each stock individually and describing what I've done right or wrong with each.