No. of Recommendations: 0
What is meant by holding at a 6% postion?

Hi ylpittman,

The portfolio was originally funded with $17,000 ($5,000 to start, $1,000 per month for a year). The percentage refers to how much of that money is invested in the company.

For each of the companies I'm buying, they're going to end up having different amounts of money invested in them based on how confident I am that they are truly being mispriced by the market and their prospects are good, as well as how much risk I think there is in the company itself.

Each investment into the various companies is worth 2% of that original $17,000, so right around $350. If the company is judged to be good enough, then I'll take a second position or even a third one, building them up to 4% or 6% of the starting capital.

The riskiest ones, like Supervalu and GameStop, will only ever get the initial investment and stay at the lowest, 2% level. That way, if they blow up, I'll have lost only a small portion of my funds. Companies that are less risky, in my view, will be moved up over time with additional investments.

In other words, I'm trying to manage the risk levels of the portfolio.

Cheers,
Jim
Print the post  

Announcements

What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.