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:

• 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.