The Personal Portfolio

Reviewing my top 10 positions and how publishing my portfolio has changed how I view my investing process.

The Pursuit of Fortune, David Scott, 1847, oil on canvas (National Galleries of Scotland)

I didn’t think laying out my portfolio for the world would invoke such strong emotions.

Your portfolio is personal, and displaying it for everyone has certainly made me feel vulnerable at times. Similarly, it has made me scrutinize, well, everything related to my investing.

In these past several months, I have spent significant amounts of time sweating my positions, my theories on portfolio composition, and my capital allocation priorities. Does the original thesis hold up? Has something changed that supports or deteriorates that thesis? Is this the best place to deploy this capital right now? How are position sizes going to impact overall returns?

These long overdue questions have profoundly changed how I view my portfolio. Three things immediately stood out as I re-examined my investing process.

1. I had far too many positions in my portfolio. Many of them were set up to track the recommendations of other newsletters, but it was far too many for me to evaluate and follow. I have sold dozens of small positions and have focused on ones in which I have some form of conviction (or at least enough conviction not to sell).

2. I was too concerned with “spreading around my bets”. Diversity can be one’s friend in the market, but even the ones I had much more conviction than others were, at times, less than 0.5% of my total portfolio. Even the best investments at a position size that small are going to have a marginal impact on total portfolio returns.

3. What was previously an adequate-sized “starter position” had become too small. I had a set amount I wanted to use for years as a starter position. Over time as my portfolio has grown, though, that starter position was becoming such an insignificant portion of the portfolio that it barely made sense to invest in the stock at all. I have since re-calibrated my concept of a “starter position”.

Investing isn’t just numbers going up; it’s a process we have to grow wealth. One’s process isn’t a static thing, though. There is no one set way to examine a business or value a stock price. I could go so far as to say that those who deploy rigid processes to investing likely produce subpar results.

The only constant in the markets is change. Therefore, our investment process must iterate as we acquire new knowledge and experiences. This experiment has certainly improved my investment process, and I hope it will positively impact yours as well.

And now, the top 10 positions:

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But first, I couldn’t go any further without thanking Koyfin for their data and charts, without which I would have much less conviction in many of the companies I have invested. Sign up for Koyfin here and receive 10% off.

Disclaimer: I have an affiliate partnership with Koyfin and receive compensation if you sign up via the link above. It helps me fund this endeavor. I would still recommend using it even if I didn’t have this partnership because it’s an awesome product, but I’d be stupid to turn down a revenue opportunity. You get a discount, Koyfin gets new business, and I get a commission. Win-win-win).