Tuesday, February 20, 2007

Portfolio Management Notes

Some notes to myself as I learn first hand about managing a portfolio of stocks...

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Position size matters - I did not go through the normal routine of calculating position sizes for the uranium stocks that I bought yesterday. As a result, a routine sell when one of the stocks hit my stop caused a bigger loss from top than expected.

Protect the portfolio's overall value - when the portfolio hits new highs, then some form of protective stop for the whole portfolio should be considered in order to protect the profits. I know this goes against the notion of trading the charts, so I will need to investigate this in my spare time to see if I can work out some sort of compromise solution.
Perhaps if I have correct position sizes, then this might be a possible solution, or an intraday chart of the portfolio's equity value might help to decide when to sell/hold.

Keep the number of stocks to a manageable sizee - I had 9 open positions, which was probably too much to monitor and track effectively. Probably better to have only 5 or 6 open positions, then it is easier to respond to stock specific technical events (like a gap up for instance).

Learn about the different types of portfolio - there's a portfolio of unrelated stocks, and then there's a portfolio of stocks in the same sector. The second portfolio behaves differently from the first. Learn about and characterize that difference in behaviour.

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