Q: Practicing "let your winners run" I now find two of my stocks accounting for
29% of my portfolio of 19 stocks - CLS 18% and PNG 11%,
Is there a corresponding expression to tell when and how to decide they've run far enough and start cutting back ?
Thanks as always for your help. It's greatly appreciated.
John
29% of my portfolio of 19 stocks - CLS 18% and PNG 11%,
Is there a corresponding expression to tell when and how to decide they've run far enough and start cutting back ?
Thanks as always for your help. It's greatly appreciated.
John
5i Research Answer:
Not really. But as large weightings increase, a portfolio becomes more of a bet on one or two stocks rather than a portfolio. One rule we like to use is to assume that ANY stock could go down 50% overnight. This, investors with a 12% position need to ask how they would feel seeing their portfolio drop 6% instantly with one bad event at one company. This can help frame risk parameters for investors.