Applying our Model Portfolio: Building a portfolio rather than just picking stocks

Beansprout Pro in brief

• Picking the right stock is only part of building a portfolio. What matters just as much is how much you invest, what else you already own, and how the different positions work together.
• A stock can look attractive and still deserve only a small position. Likewise, a stock that has already performed strongly may still deserve to remain a meaningful holding.
• This is why we do not think the most useful question is simply, “Which stock should I buy?” A better question is, “How would this stock fit into my portfolio?”
• Taking a portfolio approach also changes how you think about diversification, cash, rebalancing and when to add, hold or sell.
• In this article, we explain how we apply these principles in practice, and how Pro subscribers can use the Model Portfolio to think more clearly about their own portfolios.