I believe the choice should be dependent on an investor's individuality. For someone who is more prone to anxiety/worries/impulses, it is almost better to hold index funds and real estate. I have an ex-colleague who only invests in real estate - no equity exposures, except for $GS stock grants, and she is perfectly comfortable with it. I cannot see her holding stocks in a bear market - she would have capitulated. She prefers to watch Netflix than hold $NFLX.
On the other hand, you have those who enjoy digging into research or want to feel like part business owners via stock ownership. If that gives them meaning and joy, why limit to X number of stocks? As long as asset allocation rules are observed, of course.
@from100kto1m Exactly - got to remain liquid to survive the storms. I remember Ryan Cohen sold $CHWY for $3.3B and put all his proceeds into two stocks $WFC and $AAPL. Worked out for him and his personality profile. Different strokes for different folks