A 15% allocation is a whole lot

I just wanted to highlight this old post as great portfolio management. When I see people with positions larger than 15% or 20%, I cringe. Tracy sets a great example here that led to great results – Netflix was an opportunity cost and she added to other stuff that no doubt did better in 2019 (I believe NFLX shares ended the year lower than where it was at the time of her post). But assuming she held what was then a 13% position, she still benefited greatly when Netflix did do well (see 2022 to present).

You don’t have to drive returns with a single company. In fact, it’s dangerous. It’s also inefficient, as sometimes the market can feel differently about the company than you do. Look at Snowflake. If you bought any time from the IPO in 2020 through April of 2022…the stock is still down significantly. All that time, you could have had other stocks making you money. Imagine if you’d had 40% or 70% of your portfolio in SNOW. Imagine if you’d been adding all the way down. Staggering opportunity cost!

I’m not going to delete anyone’s posts or anything, but I must caution against putting all your eggs in a few baskets. You not only have to be right about the company, but your timing matters! Are we managing portfolios or just making a few big bets? I see no value in making a huge gamble and talking about it on a message board. Maybe it’s interesting but I have seen people get badly hurt gambling like this. Obviously you can also have insanely great returns sometimes. So are you feeling lucky? Is your bet like Gamestop in 2020 or like Upstart in 2022?

Why gamble?