Author Topic: Advisable Percentage of Portfolio Allocated to Speculation?  (Read 5719 times)

MrB

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Re: Advisable Percentage of Portfolio Allocated to Speculation?
« Reply #10 on: November 23, 2016, 02:11:13 PM »
100%
That will be the quickest way to cure you of the disease.


s8019

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Re: Advisable Percentage of Portfolio Allocated to Speculation?
« Reply #11 on: December 03, 2016, 04:11:09 AM »
What kind of speculation? Graham said that you can speculate intelligently or unintelligently. He also said that if you have many diversified intelligent speculative positions your portfolio may be of investment quality (which of course makes sense mathematically).

BG2008

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Re: Advisable Percentage of Portfolio Allocated to Speculation?
« Reply #12 on: December 17, 2016, 06:39:21 PM »
Just food for thought.  Instead of speculation, you may want to try "over concentration in your best ideas".  Over time, I've notice that I do better if I put 30%, 50%, or even 50+% into my highest conviction ideas.  What's the definition of highest conviction idea?  Healthy balance sheet, thesis thoroughly vetted, tons of DD, industry that you understand, not a dying or fast changing industry, sufficient margin of safety, good management team.  When you find one of them, you back up the truck.  For me, I've found that I compound much better this way.  Now this isn't for everyone.  Some people do very well buying 1% positions.  If your styles leads to concentration, then you ought to consider that as an option in the opposite direction.  Please do take into consideration your age, earnings power relative to your position size.  The thought is that you should be able to come back if you're wrong.     

Right on!

It takes guts but if you feel like you're right & willing to ride up & down...

I've actually find that when you back up the truck and you're truly confident, you can back up the truck even more at lower prices.  This obviously doesn't work for trades like a Fannie Mae or Freddie Mac.  But if you can find the equivalent of Procter and Gamble trading at 6x P/E, you should be backing that truck up and increasing your position size as it trades down (this assumes that you're totally confident in your thesis and there's really no risk of impairment).  I've find that I feel much better buying more when it trades lower because I know exactly what it is worth.  If the stock vacillates a few times, you can trim and add to your position and it can increase your performance over time.   

Haasje

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Re: Advisable Percentage of Portfolio Allocated to Speculation?
« Reply #13 on: December 26, 2016, 01:15:55 PM »
Define speculation a little bit more clearly. I'd say 0% to Tesla but some people would consider some of the net-nets that are apparently in your main portfolio speculative :P

Spekulatius

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Re: Advisable Percentage of Portfolio Allocated to Speculation?
« Reply #14 on: February 22, 2017, 10:32:46 AM »
100%
That will be the quickest way to cure you of the disease.

I agree with 100%. that is what I have been doing all along :-).
To be a realist, one has to believe in miracles.