Portfolio construction (part 1)

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. I might transact in any securities at any 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

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