- You don’t lose focus.
- The fewer positions force you to be disciplined and do your homework.
- You are forced to focus on the better fundamental stocks with potentials.
- You have no excuses for monitoring your stocks.
- If there are two stocks you could choose from go with the better one.
Keep INVESTING Simple and Safe (KISS) ****Investment Philosophy, Strategy and various Valuation Methods**** The same forces that bring risk into investing in the stock market also make possible the large gains many investors enjoy. It’s true that the fluctuations in the market make for losses as well as gains but if you have a proven strategy and stick with it over the long term you will be a winner!****Warren Buffett: Rule No. 1 - Never lose money. Rule No. 2 - Never forget Rule No. 1.
Monday, 21 December 2009
Meaningful Position Sizing
Meaningful Position Sizing
‘Risk no more than you can afford to lose and also risk enough so that a win is meaningful.’
Don't carry large positions which you cannot afford. Sell down until you can sleep better.
It is sensible not to put all your eggs in one basket. The reverse is also true: as a general rule, you should not diversify too much either. Keep your position sizes meaningful.
Sticking to fewer stocks and spending more time on the selection process will increase your discipline and your focus. Some of the advantages are:
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