Key insights
- The post discusses challenges in portfolio management when capital is constrained, focusing on position sizing, exit strategies, opportunity comparison, and entry timing. It raises questions about exiting positions near targets or those with weakened fundamentals. The implication is a potentially more cautious approach to investing, which could lead to reduced risk appetite and lower market participation, but the impact is limited.
This year my total investing budget is much smaller than last year, so capital feels a lot more constrained.
I’m struggling with a few things because of that:
- How do you size positions when you can’t spread across many ideas?
- How do you decide when to exit a trade if that capital might not be easily redeployed?
- How do you compare opportunities when you’re already fully allocated?
And how do you handle waiting for better entries when you don’t have much free cash?
Last year I didn’t have to think about this as much since I could just allocate more broadly. Curious how people approach this when capital is tight.
Note I have some positions very close or above to my initial target. Should I just exit those? What about companies for which my conviction decreased based on fundamentals?