09-08-2015, 01:12 PM
(This post was last modified: 09-08-2015, 01:18 PM by hendi_alex.)
To me it depends upon your weighting target. I may be very comfortable with REITs and decide to weight the sector 10% via VNQ. An initial purchase to 5% weighting would be a half position versus the eventual target amount. I may be much more skeptical on utilities but decide that I can handle a 5% weighting. I like DUK, its price dips, and 5% weighting is purchased right then. That is a full position unless upon re-evaluation, the sector begins to look more favorable and is worthy of an increase.
I usually use the following labeling rather than full position half position. 2.5% is designated a 1X weighting. That is generally my smallest full position. If I like the stock or sector, then perhaps I'll move up to a 2X weighting. In general, my biggest single stock weighting would have 4X max or 10% and biggest single sector weighting would 20%. For me this system makes it easier to tell relative weightings at a glance.
Don't know about the others, but that is how it works for me.
Only problem that I see with Rapidacid's method, though not REALLY a problem, is that the weighting scheme gives no help at all in assessing sector allocations and in determining overall diversification.
I usually use the following labeling rather than full position half position. 2.5% is designated a 1X weighting. That is generally my smallest full position. If I like the stock or sector, then perhaps I'll move up to a 2X weighting. In general, my biggest single stock weighting would have 4X max or 10% and biggest single sector weighting would 20%. For me this system makes it easier to tell relative weightings at a glance.
Don't know about the others, but that is how it works for me.
Only problem that I see with Rapidacid's method, though not REALLY a problem, is that the weighting scheme gives no help at all in assessing sector allocations and in determining overall diversification.
Alex