For the average personal investor, forty stocks is a lot to be owning and constantly rebalancing. Wouldn't one be just as well off buying sector mutual funds (or ETFs) and allocating their percentages?
It is a bit of a short cut to think in terms of the "average investor." The best framing of this conversation is that each of us has a unique capacity for the number of holdings that we can keep track of. This is typically going to be based on time available and the level of interest in the subject. For some people it is also a matter of how much skill they have, harsh as it may sound some people should not use individual stocks (I tend to believe that people with middling skill can still do quite well with individual stocks).
One way to look at this is to think there are three types of products; broad based funds, narrow based funds and individual stocks. To the reader's question some individual investors will clearly be able to handle 60 stocks in their portfolio. Certainly not most people but a capacity for something like 50 or 60 names is would not be so shocking although clearly more than most people.
Also to the reader's question yes, some combo of sector funds makes a lot of sense for a lot of people for a lot reasons. This doesn't have to mean just ten ETFs (one for each sector) but for a larger sector like maybe energy or tech more than one fund (targeting different segments, or a core and explore idea) and for a small sector like utilities perhaps one fund would suffice.
A do-it-yourselfer might be somewhat comfortable for whatever reason with stock selection in four sectors and go with ETFs in the other six. Another framing might be one stock and one ETF for each sector.
Ok, so you get the idea. The important thing with this is figuring out what you can and cannot do. An investor would not be better off doing anything but what they can understand, can live with and plays into their level of time and interest. Any, and I mean any, approach can work. There was an odd comment yesterday or the day before where the reader said the only way to beat the market is... which is of course ridiculous. I am quite sure he has success with his way but as I have said before there are people having legitimate success with every strategy you have ever heard of. That is not to say that you or I would have success with any strategy just that anything can work.
A big part of what I do is figure out what to avoid. It is not relatively time consuming and makes the rest of the task much easier. This is probably not unique to top down investors, not terribly precise but still may not work for you. Time is very well spent figuring out the best way for you to manage your own portfolio. If you chose to hire someone then it is worthwhile to make sure you really understand what the manager is trying to do and make sure you can live with it.