Thoughts on allocation percentages
Good value-add discussion from the Side Bar Chat on TradingWithCody.com that all of you have access to:
calmdaw1April 13, 2012 – 10:56 am@Cody – how big would you be willing to let AAPL get as a percentage of an overall portfolio? I have inherited shares with cost basis in the low 300’s that are over 50% of my portfolio.jmengApril 13, 2012 – 10:57 amcalm: you should definitely take some profit on that huge gaincalmdaw1April 13, 2012 – 10:58 amJmeng – the cost basis is for tax purposes only. the shares didn’t cost me anything. As best I could tell they cost my father roughly $17
calmdaw1April 13, 2012 – 10:59 amI did sell 25% already at the end of marchCodyApril 13, 2012 – 11:03 am@calmdaw I always tell people who inherit anything that “You’ve won the lottery” because no matter how much it is, it’s something that wasn’t yours until someone gave it to you. Anyway, point is, yes, I would suggest selling some more of the AAPL if it’s truly “50% of your portfolio” but if you’ve got $100k in your “portfolio” but you’ve got $3mm in real estate income properties or a $100k/month income then it doesn’t really matter if you’ve got “50% of your STOCK portfolio” in one stock since the stock portfolio overall isn’t that impactful on your overall networth/security. Does this advice make sense to everybody?eryba1April 13, 2012 – 11:05 amsure does. if its 50 % of your portfolio but just 3% of your total net wortheryba1
April 13, 2012 – 11:05 amactually in that scenario you made up, Cody, your portfolio is 3% of your total net worth the stock represents just under 1.5% of your total net worthCodyApril 13, 2012 – 11:08 amThis discussion again underscores why I refuse to play the “How much do you have allocated into each stock” game…and why I refuse to answer the “How much do you have in cash?” question in any specific way — because my income and my future income dwarf what I have in the stock market right now at this stage of my life, not to mention the fact I’ve been buying real estate at a huge discount in NM and just built a NYC-loft-inside-a-barnhouse with cash flows and so on and so forth…I am certainly more cash heavy now than I was two or three months ago when the markets were much lower…but I’m not sure how I’d even gauge the “What percentage do you have allocated to stocks right now?” question.calmdaw1April 13, 2012 – 11:08 amThanks Cody. Makes sense.calmdaw1April 13, 2012 – 11:09 amObviously my father didn’t worry about stock allocation percentages and was willing to let his winners run.
