Discover the StockOpine position sizing framework. Optimal number of stocks for diversification, when to average down, and why trimming winners beats exiting.
Excellent article packed with insights! The midas touch for me was the last part about considering a move to a Lynch style portfolio via small starter positions. The willingness to try out new ideas shows both mental flexibility and ambition to improve which I believe are key traits to long term success in the markets 👍🏻 Coincidentally, I have also open up to the idea of small starter positions where previously I was dogmatic about a full position. 😁
Yup, previously I was adamant about keeping the portfolio to a maximum of 20 stocks at anyone time because of the punchcard principles, which mean I am only willing to buy a stock when the price is low enough to justify a full 5% allocation. Over the years, I realized this approach has resulted in many mistake of omissions. One can still manage risk and mistake of commission via other guardrails. Afterall, it's better to have a slice of the cake than none at all. 🤣
Excellent article packed with insights! The midas touch for me was the last part about considering a move to a Lynch style portfolio via small starter positions. The willingness to try out new ideas shows both mental flexibility and ambition to improve which I believe are key traits to long term success in the markets 👍🏻 Coincidentally, I have also open up to the idea of small starter positions where previously I was dogmatic about a full position. 😁
Thank you for the feedback and glad you enjoyed the article.
It’s interesting to hear you have moved in a similar direction. Staying open to refining the process is a huge advantage.
Yup, previously I was adamant about keeping the portfolio to a maximum of 20 stocks at anyone time because of the punchcard principles, which mean I am only willing to buy a stock when the price is low enough to justify a full 5% allocation. Over the years, I realized this approach has resulted in many mistake of omissions. One can still manage risk and mistake of commission via other guardrails. Afterall, it's better to have a slice of the cake than none at all. 🤣
Well said :) We don’t imply that you should buy everything, but if you buy 5–10 companies over and above the 20, it won’t hurt your returns.