Asset Allocation

One of the many things this Board has taught me is asset allocation. X percentage of Y stock. This helps with some buy/sell decisions.

However, I get myself confused about allocation in our dynamic market.

Let me pose a hypothetical:

Let’s say at the beginning of our period we’ve set one of our stocks to 10% allocation. Let’s call this stock FooBar (FOO).
Subsequently FOO announces earnings, its stock price goes on a tear and a few weeks later it’s become 12% of our portfolio.

What do we do with our FOO shares?

Let’s say FOO is one of our high-conviction stocks.
For argument sake let’s not be concerned with LTerm vs. STerm capital gains nor transaction fees.

The following are some possibilities:

  1. Sell some FOO to get back to 10%
  2. Do nothing and live with the imbalance. The other stocks my come back and make FOO 10% again.
  3. Change the allocation of FOO to 12% and adjust the others accordingly.

I note one item in Saul’s Knowledgebase says: “ I definitely don’t sell winners just because they have had a run (not as a policy, anyway). I only sell if I have a specific reason.”
This would lead to items 2 or 3.

What would people here do?


I would sit back and let your winners run. Trim your losers, let the big dogs go.



I leave them alone unless there is a specific reason to sell shares.

Why chop the legs off a winner?

Does that help you?

All holdings and some statistics on my profile page

1 Like

1 Like