

The Tough Question of Good Portfolio Construction and Management
Aug 11, 2025
Dave and Andrew tackle the complexities of portfolio construction and management. They discuss effective allocation strategies, balancing conviction and diversification, and the critical decision of when to trim or let profits run. The importance of having guidelines for different investment positions is emphasized. They also note how rebalancing can sometimes hinder long-term growth if applied to individual stocks, suggesting a more nuanced approach to managing investments.
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Position Size Guidelines
- Andrew Sather uses clear position-size rules: about 6.25% full and 1.5% starter positions.
- Use tiny prospect stakes to test ideas before scaling into full positions.
Concentration Versus Broad Diversification
- Investors sit on a spectrum from extreme concentration to extreme diversification.
- Your optimal spot depends on skill, temperament, and capacity to monitor holdings.
Follower With Only Two Stocks
- Dave shares an X/Twitter follower who owned only Palantir and Robinhood to illustrate extreme concentration.
- Andrew calls that speculation, not investing, and warns of its high risk.