Philosophy
On position sizing, and sleeping at night
How much to own is a question about temperament as much as analysis.
Conviction is necessary but not sufficient. The next question, how much, is where a lot of capable investors quietly come undone.
Size it too small and your best ideas cannot move the needle. You did the work and chose not to be paid for it. Size it too large and a single mistake, or a single stretch of bad luck, can force you to sell at the worst possible moment. The right size is the one that lets you hold through the discomfort the position is certain to cause.
We size to survive being wrong, not to maximise being right. A position you cannot hold through a 40% fall is a position you do not really own. The market owns it, and it will take it back the moment your nerve goes. We would rather own a little less and keep it.
The views above are the firm's own and are provided for information only. They are not investment advice, nor an offer or solicitation to invest. Capital at risk; the value of investments can go down as well as up, and past performance is not a guide to future results.
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