Wisdom Investments
Money Management Rules
A list of good ideas is not a portfolio. These are the rules that turn one into the other — and the ones that stop a good idea from becoming a bad position.
Read this before you act on anything published here. Most of the damage done to a private portfolio is not done by the wrong stock. It is done by the right stock in the wrong size, bought with money that was needed elsewhere, and sold at the first bad quarter.
1. Decide the amount before you see the idea
Fix one rupee amount per position and use the same amount every time. Deciding position size after reading a bullish write-up is how a portfolio ends up with forty percent in whichever idea was argued most persuasively. The research is designed to be read with the size already settled.
2. Equal weight, unless you have a reason you can write down
Every idea in a research service is published with the same conviction — otherwise it would not have been published. Weight them equally. If you want to overweight one, write down the reason first; if you cannot write it, it is a feeling, not a reason.
3. A minimum of twelve positions before you consider yourself diversified
Fewer than about twelve names and a single company-specific accident sets the whole portfolio back. This is also why idea flow is deliberately slow: a portfolio built at five to eight ideas a year takes two years to fill out, and it is supposed to.
4. Fill the compartments, then stop
Decide in advance how many positions your portfolio holds — say twenty. When all twenty are full, you are finished buying new names. A new idea then has to displace an existing one on merit, which forces a comparison instead of an accumulation. "Stop when your compartments are full" is the single most useful rule on this page.
5. The holding period is years, not weeks
These ideas are written for a two-to-four year horizon. A position that is down after one quarter has not failed; it has not yet been given the time the thesis asked for. If you need the money inside three years, this research is the wrong tool for it.
6. Never with borrowed money, never with money you need
No leverage, no margin, no loan against securities to buy more of them. Money that has a job in the next three years — a fee, a down payment, an emergency buffer — does not belong in equities at all.
7. What a change in the Remark column means
The recommendation table carries a Remark and the date it was last updated. When a Remark changes, it means the thesis has been re-examined and something is different. Read the linked review note before doing anything. A Remark that has not changed means the thesis is intact — it does not mean the price has gone up.
8. Not every idea works
Losses are part of the process, not evidence that the process failed. A research service that never publishes a losing idea is either lying about its record or not taking any risk at all. The framework here is built to be wrong a predictable share of the time, to say so in writing when it is, and to keep each individual mistake small enough that the portfolio survives it. That is the entire reason for rules one through six.
9. Your circumstances are yours
These rules are general portfolio hygiene published for education. They are not personalised advice and take no account of your income, tax position, liabilities or goals. Nothing here obliges you to act on any recommendation, and the decision to buy, hold or sell any security is always yours alone.