What you will actually stick to when your portfolio is down 50% is the only question that matters in this entire checklist. Six steps of framework collapse into that one variable. Most people don't know the answer until the 50% arrives.
Action: Find the largest drawdown you've personally experienced — write down exactly what you did. That behavior is your real investing style, not the one you'll select from the menu.
Do you have a rule for how much you add when a stock falls? For example, if a position is already at your max size (say 10%) and the price drops for non-fundamental reasons, do you keep adding until it returns to the original 10% weight? Also, when adding new capital, do you “reset” the position sizing so that the original 10% effectively becomes, say, 9%?
I know it boils down to personal preference, but I'm curious what your thoughts are on this. Thanks again!
Built something I think you’ll find useful: https://automatedalpha.substack.com/p/i-reverse-engineered-the-buffettmunger
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What you will actually stick to when your portfolio is down 50% is the only question that matters in this entire checklist. Six steps of framework collapse into that one variable. Most people don't know the answer until the 50% arrives.
Action: Find the largest drawdown you've personally experienced — write down exactly what you did. That behavior is your real investing style, not the one you'll select from the menu.
Thanks for the article! I have 2 questions:
Do you have a rule for how much you add when a stock falls? For example, if a position is already at your max size (say 10%) and the price drops for non-fundamental reasons, do you keep adding until it returns to the original 10% weight? Also, when adding new capital, do you “reset” the position sizing so that the original 10% effectively becomes, say, 9%?
I know it boils down to personal preference, but I'm curious what your thoughts are on this. Thanks again!
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