Position sizing is simply how much of your portfolio you put into any one stock. It sounds trivial, but it is arguably more important than which stocks you pick — because it decides how much any single decision can help or hurt you.
Why it matters more than selection
Imagine two investors who buy exactly the same stocks. One puts 40% of their money into their favourite name; the other puts an equal small slice into each. When that favourite stock drops 30%, the first investor loses 12% of everything; the second barely feels it. Same stocks, completely different outcomes — decided entirely by sizing.
Good selection can improve your returns. Poor sizing can end your investing. That asymmetry is why professionals obsess over it.
The simplest rule: equal weight
The easiest disciplined approach is equal weight — give every stock the same percentage. For a portfolio of up to 40 names, that's around 2.5% each. No name can dominate, and you never have to agonise over "how much" for each idea.
Sizing as a percentage, not a rupee amount
Always size as a percentage of your portfolio, not a fixed rupee figure. Percentages keep the portfolio balanced as it grows and as positions rotate in and out. A fixed rupee amount slowly drifts out of proportion.
What good sizing gives you
- Survivability — no single loss can cripple you.
- Consistency — every decision is made the same way.
- Calm — because no one position is big enough to panic over.
Let the rules size for you
In a rule-based model portfolio, you don't decide sizing case by case — the rules apply the same slice to every name automatically. Discipline you don't have to summon in the moment is discipline that actually survives a bad week.
See disciplined sizing in action
See how equal-weight position sizing works in the methodology and the Model Portfolio. To follow it live, start a free 14-day trial.
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