The Investing for Beginners Podcast - Your Path to Financial Freedom Position Sizing for Beginners; Selling -50% Losers
Aug 25, 2025
Andrew and Dave dive into the intricacies of position sizing and its significance in managing investment portfolios. They tackle the pros and cons of tracking total cash versus percentages, while highlighting useful tools like spreadsheets and Fiscal AI. The hosts discuss the strategy of averaging up on stocks and when it's appropriate to implement this tactic. They also evaluate stocks that have seen significant declines, providing key insights into whether such drops are due to temporary challenges or deeper issues in the company.
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Prioritize Percentages Over Cash
- Use portfolio percentages, not raw cash amounts, to guide position sizing decisions.
- Track your holdings as a pie and rebalance or prioritize based on percentage impact to the portfolio.
When Averaging Up Can Work
- Consider averaging up into companies that keep growing with the stock price and match your risk tolerance.
- Avoid averaging up in late-stage payout companies where valuation growth is unlikely to continue.
Lifecycle Shapes Position Strategy
- Company lifecycle affects whether averaging up or averaging down makes sense.
- Early-stage growth firms need stronger stomachs due to higher volatility and risk.
