Another STONK Idea for the Equity Portfolio
This is a controversial name and it's one that I have a large history with as an investor. But I know the product very well.
When one is trying to cautiously build a portfolio from 100% cash on January 1st, there are a variety of things to consider. First, where we are in any cycle or trading wave is important. As I laid out on Monday night, I anticipate a fairly large 12% portion of the entire portfolio for one position that I’d like to build. It’s important to scale into that position properly and not shoot our shot all at once because if it goes against us at the beginning, we can’t lower cost basis without getting over exposed. But how does 12% compare to what is generally recommended from “the pros.” Well, I can tell you 12% in position is not recommended - the pros don’t even like positions that big in most sectors let alone individual stocks. But we’re not going with what CFRA and Argus Research recommend:
My first problem here is the 15.8% weighting to Health Care. Large industry? Yes. Important industry? Yes. But is Health Care a good value at a 40 price to earnings ratio for the sector? Ahhh probably no. There’s also the idea that Health Care has proven time and again to be a corrupt, disgusting, fraud-filled space. I just don’t want any part of any industry like that… or do I?
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