Chapter 8. Constructing and Managing a Portfolio
8.1 Portfolio construction
Successful long-term investing involves more than just going out and buying a bunch of your favourite shares. It is also necessary to make sure you have the right number of shares, and that those shares are sufficiently different, such that you are not exposing yourself to too much risk, i.e. putting all your eggs in one basket. In addition, you have to consider when to accumulate more shares or sell them when the price or the investment case changes.
This is the art of portfolio construction and it is a vital part of any sound investment strategy. As well as complementing the strategy’s approach, portfolio construction can help mitigate risks and enforce good habits. ...