The Money Mustache Community
Learning, Sharing, and Teaching => Investor Alley => Topic started by: K-ice on April 22, 2021, 06:24:22 PM
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I know the MMM crowd is big ETF fans. But if you DO invest in individual stocks do you follow any rules?
I know there are some TESLA folks out there.
One good rule I know is don't let any single stock be more than 10% of your portfolio.
Don't let any single sector (like health care, energy, banks, etc) be more than 20% of your portfolio.
What about selling? Would you sell if it goes up or down x%? Sell if they cut their dividend?
Perhaps you are buy and hold no matter what...
I am looking for some consensus or good reading material. Thanks
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One good rule I know is don't let any single stock be more than 10% of your portfolio.
I don't let all of my individual stocks combined reach more than 10% of my portfolio. Or rather, 90% of my portfolio is autopilot index fund stuff and I'm allowed to play with up to 10% of it, although right now I'm only in individual stocks for ~1%.
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I don't let all of my individual stocks combined reach more than 10% of my portfolio. Or rather, 90% of my portfolio is autopilot index fund stuff and I'm allowed to play with up to 10% of it, although right now I'm only in individual stocks for ~1%.
Sounds reasonable. Mine are 2.5% combined but I may look into a bit more.
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Counting only 2020-2021, yes. I try to diversify my stock picks, like I'm running my own index fund. Do I have health care? tech? industrial? energy? ... the more sectors of the economy, the better. Similarly, if two stocks overlap, that might be a sign to sell one of them.
When I hear financial news (like on CNBC), I realize everyone now knows what I just heard. So if there's a stock with interesting news, it's too late to act on it. I think it's important to avoid picking stocks in that situation. Besides picking stocks, it's important to know what to ignore.
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For the bulk of my portfolio, I follow the investing method of BetterInvesting, which is essentially a kind of GARP analysis. I do also invest in early stage and turnaround opportunities, too, but those are much more laborious to study and understand properly.
Portfolio management is important, too. I have found an interesting complication since FIRE'ing, trying to trim my winners who have exceeded portfolio maximum, which also managing my taxes and ACA spending. If I was all tax-sheltered it wouldn't be a problem. And while I have managed in the last year, I can see a point in the future where my taxable account may get bound up in all winners, not just causing income to jump but also keeping me from investing a lot of the taxable account in new ideas. Something to noodle on as I gain direct experience.