Position Sizing, Lessons from Mark Leonard, and more!
Hi everyone!
I’ve received quite a few questions on position sizing for our portfolio so I thought I share my response here. I keep my positions between 8 to 15 stocks (absolute max)—less than 8, it’s hard to sleep, because I’m not diversified sufficiently; more than 15, it’s impossible to know your companies well.
There’s no hard and fast rule to this, it depends on your portfolio size, age, and ability to tolerate volatility. But the above is a good rule-of-thumb.
One thing is for sure though, your biggest position should be the one where the probability of you losing money is the lowest, not the one that could potentially give you the biggest return (although they aren’t mutually exclusive).
For my next deep dive, I’ll be writing about my biggest position, a company in which I have been averaging up over the past few years and which I still think offers one of the best risk-to-reward ratio in the market today.
This company is growing rapidly, founder-led, has no debt, and commands above 40% operating margins with a ton of optionality!
Final call to lock-in a 20% discount and free one-month trial, with coupon “20OFF”.
*The discount will end by 31 May 2021 or after the first 100 subscribers, whichever comes first.
I. The best investment pitches are simple and a no-brainer.
II. Business Lessons from Mark Leonard
Mark Leonard is frequently referred to as the Warren Buffett of software, and he looks like he came straight out from Lord of the Rings. This article offers good insights into how he goes about investing in software companies.
III. Bilibili: The platform for Otakus?
Bilibili's rapid rise amongst China's Gen Z stemmed from their niche in the ACG (Anime, Comic, Games) community. Even as they scale to over 200 million active users, the original culture on the online platform remains largely intact.
They seem to have cracked the online community code. Read more to find out how they did it!