I wonder if anyone can share from personal experience ... if there is a such thing as simple portfolio Allocation Strategy? Here is a sample scenario. Type of account - equities, strictly ETFs Amount - $100K portfolio Hold time - anywhere from few weeks to a 1 year of holding. Industy - any/all Broker/fees - IB No leverage of any kind. Without going into weighted averages, sharp ratios, etc...I wonder if three is simpler method that anyone has used/using. I know some funds or investors do not invest more than 2-3% of the portfolio in a single position. So in case my scenario...it's $2-3K...not sure how practical in my case...just an example. I also read about Mehmet Okumus in one of the wizard books where he maintains a top 10 positions only...in other words if he wants to add another stock, say 11th candidate then one position must be liquidated to make room. But I can't recall how that top 10 was allocated...if equally divided up or... Anyway...thanks for any suggestions and good feedback.
Limiting to 2-3% per position is effectively index investing. Having that many positions is only practical for institutions anyway. The idea is you want to limit potential losses to 1-2% as a trader. That can be impossible if you are fully investd in stocks with no hedges, as correlations tend to go to 1 in a crisis. There is a lot of info around the web on ETF allocation strategy. Roger Nussbaum has a website that discusses it. ETFReplay.com is also an interesting resource. Decisionmoose.com has a long track record and an interesting approach. Basically you will need to decide if you want to allocate based on your ideas about hot sectors or try to stay diversified or follow technical approaches.