Let me ask you a question – Had you been worried about position sizing and kept hawk’s eye at it – Would you have let it become 60% of your portfolio? The fact that it became 60% of your portfolio signifies that you are so far comfortable with that amount in absolute terms as a part of your total NetWorth. Pls correct me if I am wrong.
Personally, Trent has become my almost top holding, currently in competition with Tata consumer with almost 15% of portfolio each. Would I be worried about my position sizing if any were to become 60% of my stock portfolio…would depend on factors such as what does the remaining 40% constitute and how much my stock portfolio forms a percentage of my total net worth along with my liabilities etc.
Its not a straightforward answer in case of such high quality, top promoters company. Had it been any other second rung momentum stock, decision would have been super easy. Also, factors like – which sector stock it is that has reached 60%…an FMCG may not fall as much say a retail company if things go bad…and also do I need the money or can ride the troughs if I believe in the company etc. etc.
Decision is never easy and I feel there is no rule. It depends on various factors. Lastly, I may not be eligible for advice as I haven’t reached that stage yet with a single company rising so high in my portfolio that it breaches the 40-50% mark of the overall stock portfolio! I think I may have chosen “peace of mind” as a criteria to decide the upper limit rather than any mathematical model.
Disc: Not a buy/sell advice. Views are personal and only for academic purposes. Not eligible for any advice. I can be wrong in all my assessments
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