...position sizing to balance risk and improve risk-reward.
...compare a 90:10 equity to cash in large cap stocks generating 15% (which include some stars but also dead stocks) to a
90:10 cash to equity in multi-bag potential asset class/stocks
@5% cash and multi-bag asset class/stock producing 100% return (2x)
the second portfolio returns 14.5%
the first portfolio returns 14.0%
but the second has lower overall exposure to equities, with a faster pace
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Stanley Druckenmiller obsesses over position sizing. And it's one of the (many) reasons why he generated 30% CAGRs without a single down year.
"Position sizing is 70 to 80% of the game."
https://x.com/marketplunger1/status/1866844218494206282
