12-11-2021, 09:41 AM
(12-11-2021, 07:50 AM)ken-do-nim Wrote: This also gets back to the position sizes discussion. I came up with this a while back for my port:
$1 - $500 watch position
$501 - $1000 starter position
$1001 - $2499 junior position
$2500 - $4999 moderate position
$5000 - $7499 full position
$7500 - $9999 large position
$10000 - $19999 major position
$20000+ principal position
(Obviously if your port's overall size is much higher than mine, adjust the numbers accordingly)
It's not just about the flat number of stocks you own, I think it's about how many are at each tier. The higher the tier, the more you have to know about their financial health. For instance, I have 33 stocks, but out of that, 12 are at Junior or less, and another 8 are Moderate. So only 13 are larger investments.
A little different but same general principle. When I started I set $5k as my standard transaction size, mainly to take fees mostly out of the equation in impacting my returns. Once Fidelity dropped fees I decided to stick with $5k as an initial buy size but add whenever I had accumulated $1k in dividends.
The reason is that I have a watch list of probably 80 stocks and until last March ran quarterly screens to set/adjust my target price (and add/remove companies). If I added every time something dropped to an attractive price while I held $1k, I was afraid I'd end up with a LOT of tiny positions. I spend as much time tracking my "onesies" - companies I have just the one buy of - as something I have a full position in (5% of portfolio, calculated using purchase price, not current value). I'd likely do the same if I have only $1,000 in something.
In fact, over the last few months I got rid of the four onesies I had. I was initially going to retire in 2022, not 2021. By moving things up a year and starting to accumulate cash I didn't have time to build the positions - all were first bought in late 2020 or early 2021. As small as they were - and the fact that IMO they were solid but not fantastic stocks - I decided it wasn't worth my time to track them.
The IRA rollover will not be as much as my total received from my property sales, but will be well more than any single buy was. So with that amount of capital available at one time I'm going with $10k as my standard initial buy figure. Plus I've already determined that $5k is too small of a position size to mess with. Though there is the Roth which is tiny and every position is $5k or less . . . Hoping most Roth positions will end up being duplicated in the IRA to get them up to size. If not, I'll have more selling to do.