Best way to redistribute and rebalance portfolio

Discussion in 'Trading' started by brooklyn_3p3, Feb 20, 2007.

  1. The question I have is one of those "good problems" questions. When I first started investing around five years ago I made sure to carefully balance my portfolio, never having one stock make up more than 5%-10% of my entire portfolio. However, over the years as I have cut the losers and added to the my winnings many of my initial investments, such as MVL, ATVI, EBAY, SYMC, YHOO, now make up a significantly large portion of my portfolio. I have very rarely sold my winners over the years but now that these stocks make up such a large percentage of my portfolio even the smallest movements can be quite painful (especially when it is a movement down!).

    My question is how is the best way to redistribute and rebalance my portfolio? When I first started investing five years ago I had around 20 stocks with equal share. Now I currently have 5 stocks which make up nearly 80% of my portfolio. I am scared to sell my winners as I don't want to lose out on more gains, but at the same time I am frightening when one of these stocks moves down quickly (such as EBAY or SYMC recently). I want to make money please tell me how is that possible. How the decision has to be taken.
  2. MTE


    The question is why did you end up with such a concentrated portfolio, why didn't you add new stocks when you sold the old ones?

    In any case, what you can do is simply buy put options on the stocks you want to protect. The protection will cost you, but assuming you have some reasonable gains there in the stocks, giving up a few % points shouldn't be that much of an issue for you. The protective puts give you all of the upside with a limited downside, for a price of course.

    This is NOT an investment advice, it's just an idea to consider/explore.