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

To: Rarebird who wrote (74717)	12/30/2023 1:21:05 PM
From: E_K_S	1 Recommendation Recommended By Lance Bredvold Read Replies (1) \| Respond to of 78476

How to size the portfolio & diversification helps My average full position is only 1% of the portfolio and in most cases I plan to hold for years (if not decades) as long as I can obtain a 10% average compound growth (including dividend income). When I buy lots at different prices (usually every 3%-5% lower in price; sometime I also average up), I achieve an average cost after a period of months where I believe the value plus dividend meet my objective. I have been wrong many times when I establish a position in 1, 2 or even three buys and found if the stock is a compelling Buy, it should be a compelling buy in 3 months or if it falls an even more compelling buy in 6 months. Therefore, every year, I will evaluate those Buy lots and harvest the high price lots for tax loss selling (thus reducing my average cost). I only do this if I believe the company has good core assets, pays a div and/or continues to grow revenues and/or a management team that is working out a turn around. Some of the losers are cyclical in nature and s/d eventually move higher. The biggest help is I typically NEVER exceed my 1% core position holding (some time it may be as high as 2% but must be a one time 'event' buying opportunity). This way, I can let the position grow over time (typically years) to a 3% or even 5% portfolio position. I then will peel off 20% of those gains (maybe more) and off set w/ any long term losers that have not worked out. I keep all of my gain inside the portfolio. Many of those shares have a very low cost basis, continue to generate a good div yield (based on cost) and there is no need to ever close that position other than periodically peeling off a few shares if/when I find other compelling 'new' buying opportunities. With over 110 equity positions, it is always easy to find high cost lots both short term & long term to peel off to (1) build up cash, (2) book gains and/or (3) or harvest losses to off set gains. I never like to pay taxes if I do not have too, so this strategy has helped my reduce my annual tax liabilities, prune/trim the portfolio and always have a crop of good companies that generate income and can grow.