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Position Sizing

After considering the number of stocks in the portfolio, the next objective in portfolio management is position sizing. What percentage of the portfolio will be allocated to each security in order to generate the maximum possible return? This depends upon the number of securities that are available at that particular time. If you have decided to go with a 15-stock portfolio when you are selecting the stocks for investment, assign numbers for those selections, with number 1 being the best selection and number 15 the stock with the least potential. You should allocate around 35 to 55 percent of the portfolio to the top five selections, 20 to 30 percent of the portfolio for the next five positions, and the remainder to the last five positions....


  

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