I’ve been thinking hard in the past recent weeks of allocating my portfolio positions based on the different categories of equities.
This is not exactly a diversification strategy, as the intention is not to spread the portfolio too widely which results in a small amount of each position.
The intention is to be more clear-headed when selecting and each position still has a thesis or quantifiable factor that allows for a better determinant.
Ideally, every position has to be a conviction play, so this means allocating minimally 5% of the portfolio and mentally I have to accept that I can allow more than 30% to sit in the portfolio. Without that conviction, it is a little bit like throwing darts. I can be 100% or 200% up in a position for glove makers or healthcare but if it takes only 1% of my overall portfolio, it’s hardly moving the needle in the portfolio.