Managing a Concentrated Portfolio - How do you do it?

[Cor]

Hi Gents,

I would greatly appreciate some advise on helping me manage a non-diversified portfolio from the experienced folks here. I am fairly new to investing and have a 30ish year investment horizon for context.

Not by choice, but I ended up with a >50% portfolio allocation in a single SaaS stock (large cap). It lagged the S&P over past couple of years and is taking quite the beating this year along with the entire sector. My general comfort level around a single stock is a 1-2% allocation, and I think I've seen people recommend up to 10% or so typically? 

My general strategy is holding everything long-term and I'm mostly in indices outside of this one position - and some very small "learning" positions in individual names. However, it's discouraging trying to track annualized returns with this one stock weighing everything down so heavily. Part of me thinks I should have sold and moved the funds to an index some time ago, and part of me doesn't want to take the loss and just hold for years to come. 

Stock investing seems hard from a mental point of view and I'm still learning on how to manage my emotions. The recent SaaS dump is tipping the scales a little and I'm just looking for some guidance from brighter minds. Thanks guys. 

 

[SharperDingaan]

Most would sidebar this large and restricted position into it's own portfolio; both for the tax possibilities, and to avoid distorting the 'core' portfolio. Thereafter, everything in the 'core' portfolio invested in anything but SaaS.

 

Thereafter what you do with that SaaS position, will very much depend on your expertise and experience in the sector. Long term sell or hold dependent on where you think the tech could go, a decision best made when you also have industry expertise. Risk tolerance thing.

 

Good luck.

 

SD 

 

 

 

[73 Reds]

57 minutes ago, SharperDingaan said:

Most would sidebar this large and restricted position into it's own portfolio; both for the tax possibilities, and to avoid distorting the 'core' portfolio. Thereafter, everything in the 'core' portfolio invested in anything but SaaS.

 

Thereafter what you do with that SaaS position, will very much depend on your expertise and experience in the sector. Long term sell or hold dependent on where you think the tech could go, a decision best made when you also have industry expertise. Risk tolerance thing.

 

Good luck.

 

SD 

 

 

 

+1.  Side note:  Any allocation decision with regard to the single stock should be made when you want to, not when you have to.

[Paarslaars]

I mainly do this by praying a lot and crying every now and then...

[Longnose]

I cry on the inside. But know the numbers and story of the company up and down.  Then I remind myself that markets are irrational and in no world would the company be taken private for the current valuation/marketcap. Then i go to sleep with a hope and prayer that the market will recognize how dumb the valuation is tomorrow. 

 

Usually I don't take these positions unless i have really strong conviction. but I am dumb enough to put 75-80% of my eggs in one basket on more than one occasion. 

 

Conviction is probably the biggest piece for me. Doesn't make it more enjoyable but it make holding easier.