Regular Portfolio Cleaning Enhances Investment Focus

During their recent episode, Taylor, Carlisle, and Adam Mead discussed Regular Portfolio Cleaning Enhances Investment Focus, here’s an excerpt from the episode:

Jake: I was just going to say, I know an investor who, if a position– He has a position, minimum, so if something falls below certain threshold, either you have to allocate more to get it back up to the target threshold or you need to sell it completely, but you don’t just let it sit there at 1% or 0.5% or something.

I think it’s more about just your bandwidth and being able to focus on what you own, which I know that I would periodically would go through and clean the portfolio out of some of those smaller positions that you inevitably just lose conviction in, and have a good feeling on the other side of that when you actually do get that fresh slate, and then I always would remark like, “Gosh, how come I didn’t do this sooner, every single time? Why did I let this go on for as long as I did?” [chuckles]

Adam: Yeah. I like keeping a clean portfolio. But I’ve had these positions too. I own Cimpress for almost 10 years. I was talking to another investor and he asked me a question about the business, and it made me realize that I didn’t understand the business as well as I should and I sold it. It’s gone up a couple times since I’ve sold it, of course, but just that feeling of like, “I don’t really have any business being in this stock right now.” [Jake chuckles]

When you have, I try to keep it under 10 positions. I don’t have any stated whatever metric or goal, but it’s just evolved that way. It’s like just keeping track of them or position sizing. If you really want to make a big bet, you got to be different.

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