Thanks for your replies!
Another questions I’ve regarding churning and portfolio rebalancing. I’m in a very early stage of investing started out with investing just 1k in a stock.
In a few months to make sure that I’m investing say x% of my portfolio, i invest more money than before (Say 10k on a stock, since portfolio is growing), older stocks tend to diminish in weightage and the no of stocks start to increase.
I tend to avoid upward/downward averaging in such stocks with the thought that maybe the stock has gone into consolidation or some other reason like already given a good run up etc.
So with 50k portfolio with 10 stocks of equal weightage. Now one starts investing 10k in new stocks. Then say 25k in each stock. By the time the portfolio is 2 lakhs, the older ones contribution would have reduced from 10% each to 2.5% (invested amount).
Should one start rotating the older and smaller weighted stocks to different stocks or maybe average them? What thought process can go into deciding it.
I understand about conviction, but sometimes if it’s already 100% up, averaging up becomes psychologically difficult. Similar for the 15% down.
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