I want to talk about position sizing and why is it critical to you. Let’s say you were fortunate to buy Amazon stock when it first came out. You’ve done extremely well no doubt about it. Now, why is important? It's important because Amazon may have quietly became over 50% of your entire account balance, and that comes with risk. Let’s say Amazon went down 50%, and it was 50% of your account. In a $1 million portfolio you would be down a quarter million dollars. In retirement, not many people can stomach seeing that kind of volatility and their retirement fund decrease that much. An interesting face for Amazon is that over half the time that you owned it you were down 50% from the recent highs. So, half the time you would be down significantly. This is why it’s very critical to know how much of each position you currently own in your portfolio. because that does come with risk. If you’d like a review give us a call at The Schneider Group. We’d be happy to review your portfolio with you.
This is a hypothetical example and is not representative of any specific investment. Your results may vary.
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