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Strategies & Market Trends : Value Investing -- Ignore unavailable to you. Want to Upgrade?

To: E_K_S who wrote (51242)	4/7/2013 3:05:16 PM
From: Spekulatius	Read Replies (2) \| Respond to of 78473

I used to have a hard limit of 5% for a single stock position in place since about 2002, when I decided to go back to my value roots (and started to post in this thread) and become more risk averse. Generally have upped that allocation limit to about 10% in a few cases, where I consider the business to be every safe. I do have only one (undisclosed) position in the 10% range currently and several in the 5-10% range (KSB3.DE, NSRGY, TOT (again) ). I typically start to buy a first position in the 1% range.

To: E_K_S who wrote (51242)	4/7/2013 5:17:08 PM
From: Jurgis Bekepuris	Respond to of 78473

None of my top-10 positions are bigger than 5% of portfolio. I have never had a position grow to 10%, so I can't tell you what I would do if it did. I start with 0.3% positions and may add more in similar sizes. As I said yesterday, this might be too small initial size and too small of an increment. I never buy large positions like Ben Graham suggested in 1-2 buys. Clearly scaling in works better when stock is falling, but worse when stock is rising. Since market mostly rises, scaling in is a bad macro strategy (Ken Fisher makes this point). However, it might be better in terms of research, since you get more info and see more risks while scaling in.