I struggle to decide on position sizes and wanted to formalize the process for some time. This is part one that ends with a conclusion I am eager to build on.
This is not investment advice. Please read the disclaimer. I might own discussed stock(s) currently or at a later time.
Portfolio construction is about balancing the risk of losing money and the risk of missing opportunity. It is about taking decisions on an infinite set of trade-offs.
It is about finding a delicate balance between offense and defence. I tend to position my portfolio on the defensive side, lowering the risk of catastrophic events.
>> you can read part 1 (pdf) here.
I concluded to plott my (potential) investments on a simple graph showing
- estimated after-tax IRR
- overall conviction
- current position size
searching 4 value 