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AvatarThomas Ott
Participant
Post count: 5

Allocation had been my biggest mystery. I’ll skip the resolution rationale and share my current approach thinking:
Assume Sean’s stock picks and traunch prices are correct. Triple the number of picks (now 15), divide your total portfolio value by that (thus 45) and name it “$$”. Do the same if instead you are adding a block of money to your existing portfolio. (and, I suppose, reverse Buy and Sell actions if pulling money from your portfolio)

Buy $$ worth of each stock in the active LI Portfolio if the current price is at or below Sean’s recommended buy-in price. Skip those stocks which have already run up (only 2 have). Keep an eye on those initially above the buy-in level and buy a $$ amount of each if they eventually qualify.

Next, compare the current price of each stock to its Average-Down points provided by Sean, and buy $$ worth of each stock having sunk below each of those thresholds, but buy no more. So currently, 15 stocks specify 45 traunches of $$ each, of which 26 would be invested in executed Buys, while 19 traunches remain available in Cash (or 42%).

The temptation to smartly “invest” that idle 42% will be very high; my experience says that is not a good idea, especially in an overpriced market.

Looking at the last Monthly Table of LI Positions exited and duration held data, I estimate that the invested portfolio portion return rate has been +30% per year (and dividends may be an additional return). I can’t estimate the cash level of the LI Portfolio (which is not invested) because I don’t know the number of traunches per stock that were invested. But if one assumes a 42% cash level for lack of any other, the overall Portfolio return is running 13% per year.

Meanwhile, only one position has failed, and that due to government intervention. Plus, we are positioned well for that coming, or not, “correction”.