Hey guys,
I was hoping to share my framework and get some advice, particularly around trimming stocks. Selling is something I’ve always struggled with and want to get your advice.
My portfolio consists of 10 stocks (50%) and an etf (50%)
Against each stock o measure two things:
Is thesis on track and its current valuation.
For the thesis typically I’ll have on track, needs further evidence and broken.
For value I have: big discount, discount, fair and over valued.
Once I have done my due diligence in a stock and value is at “big discount” I’ll create a starter position of 5%
Then every month when I get paid I’ll buy more of the stocks assuming they are at discount or better and the thesis is on track.
I’ll hold the stock and not add further if it is fairly valued or if the thesis needs further evidence.
I’ll start trimming the stock if it becomes overvalued and cap its position to 10% of portfolio
And if the thesis breaks then I consider exiting all together.
Does this approach seem reasonable? I’ve been doing this for a year so could use some more experienced members of the community giving their thoughts.