Maximum single position size

Asset allocation, risk, diversification and rebalancing. Pros/cons of hiring a financial advisor. Seeking advice on your portfolio?

What is your maximum single position size ?

less than 1 %
0
No votes
1 to 5 %
22
35%
6 to 10%
18
29%
11 to 20%
10
16%
20%+
8
13%
I don't have one
5
8%
I measure it in $, not %
0
No votes
 
Total votes: 63

hboy43
Silver Ring
Silver Ring
Posts: 161
Joined: 28 Nov 2007 17:20

Re: Maximum single position size

Post by hboy43 » 19 Sep 2017 12:52

deaddog wrote:
18 Sep 2017 11:02

Sounds like a formula for culling your winners and adding to your losers.
Yes it is, also known as selling high and buying low. I have been very successful doing this. Every transaction does not work, but the totality has been spectacular over the long term.

Oh sure, it took 6 or 8 years, but the additions to OSB back in 2009 to 2011 time frame at under $10, when my initial buy was ~$100 circa 2004 or 2005, so a "loser", looks OK today sitting at $46, and I still have 82% of the number of shares I held at the end of 2011. Portfolio weighting year end 2011 was 5.4%, today about 10%. This "loser" has made me a $1/4M. Other well liked losers in my portfolio are TECK.B, ECA, MX, all hammered into the ground at one point, all made me 6 figures in the long term because I bought more at low prices. I like losers, they are very profitable.

The reverse, selling winners, has occasionally been useful too: I sold 2/3 of my Nortel common at $82 IIRC. Now there was some luck here as I needed money to buy a house, but I had to stare down the portfolio and decide what should go, and this choice saved some grief in the long term.

Now this occasionally loses for me as I said. I sold off my initial 4500 SNC and left a 6 figure sum for someone else to harvest, but this "error" is completely dominated by the successes.

Now you or someone else will tell me how you bought Microsoft, or Apple, or Facebook, or Google, and rode it to 50% of your portfolio and made $1M. The thing is I am stunningly unlucky in general and I have to as much as possible drive luck out of anything I do to have any chance at success. Holding something to 50% and having it stay there for decades just seems too luck dependent to me. If I were inclined to try this, I would have chosen a Nortel.

No, given one hammer, one nail, one thumb, hammer will find thumb. But with investing in a few dozen companies over decades and hundreds of transactions, it turns out that while the individual transactions are highly luck dependent, the totality of the process is highly deterministic, and it is really the only thing I have ever been really successful at.

hboy43

User avatar
AltaRed
Diamond Ring
Diamond Ring
Posts: 18373
Joined: 05 Mar 2005 20:04
Location: Ogopogo Land

Re: Maximum single position size

Post by AltaRed » 19 Sep 2017 13:09

It is the fortitude to 'stay the course' and be a contrarian that was/is a significant part of your success. Everyone has to know thyself and it is in keeping with that knowledge of thyself that the deterministic outcome is 'certain' over a long period of time.

Added: Too many investors change strategies when the business environment changes and they don't like what they see. That is what can hurt them.
Imagefiniki, the Canadian financial wiki The go-to place to bolster your financial freedom

User avatar
deaddog
Gold Ring
Gold Ring
Posts: 2604
Joined: 19 Jan 2008 19:59
Location: Central BC/Arizona

Re: Maximum single position size

Post by deaddog » 19 Sep 2017 16:52

hboy43 wrote:
19 Sep 2017 12:52

Oh sure, it took 6 or 8 years, but the additions to OSB back in 2009 to 2011 time frame at under $10, when my initial buy was ~$100 circa 2004 or 2005, so a "loser", looks OK today sitting at $46, and I still have 82% of the number of shares I held at the end of 2011. Portfolio weighting year end 2011 was 5.4%, today about 10%. This "loser" has made me a $1/4M. Other well liked losers in my portfolio are TECK.B, ECA, MX, all hammered into the ground at one point, all made me 6 figures in the long term because I bought more at low prices. I like losers, they are very profitable.

hboy43
I take it you sell off your winners to add to your losers quite successfully. You mentioned that one of your positions was 10% of your portfolio. At what point do you rebalance.

Selling a stock or selling part of a position that is rising just because it reaches a certain percentage of your portfolio seems to me that the primary objective is to maintain a well diversified portfolio rather than to maximize portfolio returns.

You have had great success with some of your picks. Anything in your portfolio that you are still adding to waiting for it to turn around. Prior to Nortel I had a few. Royal Trustco, Peoples Jewellers & Laidlaw to name a few. I got out of Nortel with a profit but at around $12. Left a lot of money on the table. Now I only buy stocks that are going up. Buy high sell higher. Take a lot of small losses when I hit my thumb. It is a strategy that works well for me and allows me to sleep nights.

My biggest holding is Boyd Auto. Never had a reason to sell since I bought in 2009.
Most of our so-called reasoning consists of finding arguments for going on believing as we already do.( J.H. Robinson)

hboy43
Silver Ring
Silver Ring
Posts: 161
Joined: 28 Nov 2007 17:20

Re: Maximum single position size

Post by hboy43 » 21 Sep 2017 11:40

deaddog wrote:
19 Sep 2017 16:52

I take it you sell off your winners to add to your losers quite successfully. You mentioned that one of your positions was 10% of your portfolio. At what point do you rebalance.
I have no formulaic methods, pretty arbitrary and ad hoc. Usually sell some when over 25% above target weighting. I have sold down OSB twice in the past 6 months or so, around $38 and $42. Sometimes I have a buy idea that needs a source of funds, so the sell candidate might not be that far over target weighting. I also purchased OSB at $21 two or so years ago, a number that would be higher than my ACB, so I am not just chasing losers down, but reading the signals in my portfolio and adding when the weighting becomes well down. OSB traded in the $30s prior to dropping to the low $20s, so weighting moved downwards by about 1/3.
deaddog wrote:
19 Sep 2017 16:52
Selling a stock or selling part of a position that is rising just because it reaches a certain percentage of your portfolio seems to me that the primary objective is to maintain a well diversified portfolio rather than to maximize portfolio returns.
I see the primary action as reading the wisdom (or !wisdom) of crowds to buy high expected value and sell low expected value, with the diversification and good portfolio results both being the happy side effects.
deaddog wrote:
19 Sep 2017 16:52
You have had great success with some of your picks. Anything in your portfolio that you are still adding to waiting for it to turn around. Prior to Nortel I had a few. Royal Trustco, Peoples Jewellers & Laidlaw to name a few. I got out of Nortel with a profit but at around $12. Left a lot of money on the table. Now I only buy stocks that are going up. Buy high sell higher. Take a lot of small losses when I hit my thumb. It is a strategy that works well for me and allows me to sleep nights.
Yes, one must be vigilant of chasing a company to zero. I minimize this issue by mostly owning companies that make long term useful things and provide long term useful services. This is why I don't work with technology companies. I have no basis for dodging all the ones that fall away leaving the Apples et al standing. 4x8 panel products have been used in housing for about a century, and will likely be used long after I am dead. Methanol is a feedstock chemical for all kinds of things - long term useful thing. So that would have kept me out of People's, though I concede that Royal Trustco and Laidlaw could have trapped me. I have had bankruptcies, six in fact, but that was years ago before I really developed an explicit idea of what I do and why I do it.

Current and only loss position (-28%) in my portfolio is BTE. I have added this year. I have had BBD.B for 15 or 20 years. Not currently a loss position, last adds more that a year ago. Sure has been a long time and much work to make GIC level returns with this one - there is always the tantalizingly low P/S ratio and other metrics. Against all the shit of 2 decades is the fact that the C series seems to be technically an excellent plane, and new people brought in from outside the Bedouin/Bombardier families might do us long suffering shareholders some good.

hboy43

BRIAN5000
Gold Ring
Gold Ring
Posts: 5870
Joined: 08 Jun 2007 23:27

Re: Maximum single position size

Post by BRIAN5000 » 21 Sep 2017 17:32

Sure has been a long time and much work to make GIC level returns with this one - there is always the tantalizingly low P/S ratio and other metrics. Against all the shit of 2 decades is the fact that the C series seems to be technically an excellent plane, and new people brought in from outside the Bedouin/Bombardier families might do us long suffering shareholders some good.
I own this piece of crap as well (bbd.b) wonder if I would have sold and just indexed the funds how much further ahead I would be. Held it a long time it's split twice since I've owned it and it's still in a loss position. Their management is good at getting money from the government O'leary is right on this one I should sell this dog.
“Sometimes you are going to sell early and wish you would’ve held on, other times you will hold on a
little bit longer and wish you would’ve sold early - this is just part of the game.” - Frank Zorilla via Abnormal Returns

User avatar
deaddog
Gold Ring
Gold Ring
Posts: 2604
Joined: 19 Jan 2008 19:59
Location: Central BC/Arizona

Re: Maximum single position size

Post by deaddog » 21 Sep 2017 22:38

hboy43 wrote:
21 Sep 2017 11:40
Usually sell some when over 25% above target weighting.

hboy43
What is your target weighting or does that depend on the specific stock?
Most of our so-called reasoning consists of finding arguments for going on believing as we already do.( J.H. Robinson)

BRIAN5000
Gold Ring
Gold Ring
Posts: 5870
Joined: 08 Jun 2007 23:27

Re: Maximum single position size

Post by BRIAN5000 » 22 Sep 2017 14:02

I have a small trading portion of my portfolio which I have tried to automate with rules based on 52 w highs and lows and my best guess dart throwing (which is poor). Making a little bit of money but stocks are running away upward after my sells. Currently I have CWB on the chopping block as a sell. As you can see from just a couple I posted looks like I need a new rule on the sell side maybe a trailing stop loss or a technical event of some sort? If it works 60ish% of the time I'd be happy, no deep thinking or hours of studying fundamentals etc. whimsical is ok.



buy & sell.png
“Sometimes you are going to sell early and wish you would’ve held on, other times you will hold on a
little bit longer and wish you would’ve sold early - this is just part of the game.” - Frank Zorilla via Abnormal Returns

User avatar
deaddog
Gold Ring
Gold Ring
Posts: 2604
Joined: 19 Jan 2008 19:59
Location: Central BC/Arizona

Re: Maximum single position size

Post by deaddog » 22 Sep 2017 15:01

BRIAN5000 wrote:
22 Sep 2017 14:02
I have a small trading portion of my portfolio which I have tried to automate with rules based on 52 w highs and lows and my best guess dart throwing (which is poor). Making a little bit of money but stocks are running away upward after my sells. Currently I have CWB on the chopping block as a sell. As you can see from just a couple I posted looks like I need a new rule on the sell side maybe a trailing stop loss or a technical event of some sort? If it works 60ish% of the time I'd be happy, no deep thinking or hours of studying fundamentals etc. whimsical is ok.
Brian;

Depending on your time frame. You can use a Moving Average cross. I use daily 3/8 for short term trades. If they turn into longer term trades, I switch to a weekly chart and eventually change to a weekly 10/30.

All trades start out as short term. If they run for a couple weeks without an exit signal and have gained enough I switch to the weekly chart. Again if the price action is favorable, the stock continues to make higher swing highs I move the exit signal to a higher moving average.
Most of our so-called reasoning consists of finding arguments for going on believing as we already do.( J.H. Robinson)

hboy43
Silver Ring
Silver Ring
Posts: 161
Joined: 28 Nov 2007 17:20

Re: Maximum single position size

Post by hboy43 » 22 Sep 2017 21:03

deaddog wrote:
21 Sep 2017 22:38
hboy43 wrote:
21 Sep 2017 11:40
Usually sell some when over 25% above target weighting.

hboy43
What is your target weighting or does that depend on the specific stock?
Most are 4 to 5%. Some double that.

BRIAN5000
Gold Ring
Gold Ring
Posts: 5870
Joined: 08 Jun 2007 23:27

Re: Maximum single position size

Post by BRIAN5000 » 04 Oct 2017 13:54

deaddog wrote:
22 Sep 2017 15:01
BRIAN5000 wrote:
22 Sep 2017 14:02
I have a small trading portion of my portfolio which I have tried to automate with rules based on 52 w highs and lows and my best guess dart throwing (which is poor). Making a little bit of money but stocks are running away upward after my sells. Currently I have CWB on the chopping block as a sell. As you can see from just a couple I posted looks like I need a new rule on the sell side maybe a trailing stop loss or a technical event of some sort? If it works 60ish% of the time I'd be happy, no deep thinking or hours of studying fundamentals etc. whimsical is ok.
Brian;

Depending on your time frame. You can use a Moving Average cross. I use daily 3/8 for short term trades. If they turn into longer term trades, I switch to a weekly chart and eventually change to a weekly 10/30.

All trades start out as short term. If they run for a couple weeks without an exit signal and have gained enough I switch to the weekly chart. Again if the price action is favorable, the stock continues to make higher swing highs I move the exit signal to a higher moving average.
How does this compare to your sell strategy now?
On Oct 2 the 10 day crossed the 30 day at $34.07 on a 5 day yahoo chart was that the sell signal?

I had a trailing stop alert set that emailed me at 9:41 this morning.
Alert Name: CWB - Stop
Alert Description:
Canadian Western Bank (CWB:TSX)
Price Crosses Below $33.39
Monitoring a tight Recognia trailing stop since September 26, 2017
Price: $33.37
“Sometimes you are going to sell early and wish you would’ve held on, other times you will hold on a
little bit longer and wish you would’ve sold early - this is just part of the game.” - Frank Zorilla via Abnormal Returns

User avatar
deaddog
Gold Ring
Gold Ring
Posts: 2604
Joined: 19 Jan 2008 19:59
Location: Central BC/Arizona

Re: Maximum single position size

Post by deaddog » 04 Oct 2017 19:54

BRIAN5000 wrote:
04 Oct 2017 13:54

How does this compare to your sell strategy now?
On Oct 2 the 10 day crossed the 30 day at $34.07 on a 5 day yahoo chart was that the sell signal?

I had a trailing stop alert set that emailed me at 9:41 this morning.
Alert Name: CWB - Stop
Alert Description:
Canadian Western Bank (CWB:TSX)
Price Crosses Below $33.39
Monitoring a tight Recognia trailing stop since September 26, 2017
Price: $33.37
We have to be looking at different charts of CWB. (Canadian Western Bank)
On the daily chart I have the 3 day moving average above the 8 day moving average since the end of August.
My sell signal would be on the day the 3ma crosses below the 8ma. (hasn't happened yet)
I sell the next day if the price trades lower than the prior days low.
On the weekly charts where I use the 10/30 ma cross the price is well above both the 10 and the 30ma's.
Most of our so-called reasoning consists of finding arguments for going on believing as we already do.( J.H. Robinson)

Post Reply