Today I will focus on how I view my portfolio and how I allocate my capital. This blog is inspired by Motley Fool’s CEO Tom Gardner’s following tweet: I have been a member of Motley Fool Stock Advisor since 2017. The most important thing that I learned from Tom Gardner is that growth companies’ returns closely track their revenue growth rate in the long run. This insight was a revelation for me; before that, I dismissed companies with hyper-growth and early growth simply because they did not have a long earning track record, which is where I thought all the values lay. Another article from Bill Gurley that helped me evaluate growth companies without earnings but those that were scaling is the following:
1. Do you keep a certain amount in cash to add to positions when a correction happens or do you DCA with additional cash on a periodic basis?
2. Do you rebalance when a position becomes too big due to performance?
3. With 50 stocks, looks like you are trying to get to an allocation that's 2% of the total amount for each position? How much is your starter position?
4. What about Margin of Safety on the intrinsic value to start a new position?
Very insightful Anil. Few questions -
1. Do you keep a certain amount in cash to add to positions when a correction happens or do you DCA with additional cash on a periodic basis?
2. Do you rebalance when a position becomes too big due to performance?
3. With 50 stocks, looks like you are trying to get to an allocation that's 2% of the total amount for each position? How much is your starter position?
4. What about Margin of Safety on the intrinsic value to start a new position?
Thanks for sharing your thoughts and insights into how to select and manage a portfolio.
well written