Key insights
- The author discusses their portfolio allocation strategy, currently favoring indexing (90%) over individual stock picks (10%) due to their relative inexperience. They aim to improve stock-picking skills and potentially increase the allocation to 20-25% in the future. The author acknowledges underperforming the S&P 500 YTD but remains focused on long-term value investing and skill development. The post explores the rationale behind weighting individual stock picks versus index funds.
For all those who mix indexing and stock picking, I would have liked to know how you decide(d) the weighting of each.
Because I am still relatively new to stock picking, I allocate max 10% of my portfolio to singles stocks. It is not much, and won't move that much the needle. But the goal was to work on skills and see if I get used to the exercices and results show. If I feel positive, I could see getting the 20-25% stock picking. The rest goes into World ETF + Small cap value ETF.
But at what point have you enough insight ? Especially value investor - compared to momentum investor - need quite a bit of time to see their value picks turnaround. For instance, I have invested in some turnaround companies that still are volatile: Topicus, Nu Holding, Mips AB -- my best pick -- and Wolters Kluwer. Today, goal is not to reinforce them too fast and find good entry point in higher quality/anchor companies like Hermes, Google, Heico, SPGI or Intuitive Surgical. YTD, i underperform the SP500. I am really not worried about that.
Anyway, curious to hear how and why you decide a particular allocation stock picks vs Index