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Hall of Fame coach Gregg Popovich had an unusual problem during the later years of Tim Duncan’s career.
Duncan was still one of the greatest basketball players in the world. But he was getting older.
The two had already won four championships together. And Popovich knew that squeezing every possible minute out of his star during the regular season wasn’t necessarily the best way to win another one.
So, the longtime San Antonio Spurs coach began to carefully manage Duncan’s workload.
Duncan was still tremendously valuable. But by his mid-30s, coach “Pop” simply couldn’t risk having Duncan carry too much of the team’s load. So, he generally kept his regular-season playing time to about 30-32 minutes per game.
Sometimes, he would have him completely sit out the second game of a back-to-back night.
On the official injury/inactive report, Pop would famously list Duncan’s reason for missing a game as simply: “old.”
See, coach Pop’s job wasn’t to play Tim Duncan as much as possible. His job was to put the Spurs in the best possible position to win.
The same principle applies to your portfolio, folks.
Finding the right stock is important. But you also have to decide how much money that stock deserves, how it fits with everything else you own and when its role should change.
So, in today’s Market 360, I want to discuss one of the most overlooked decisions in investing: position sizing and allocation. And I’ll show you how Luke Lango, 抖阴最新版 and I are putting that idea into practice with the newly rebuilt AI Revolution Portfolio.
A Great Stock Isn’t a Portfolio
Investors naturally spend most of their time asking one question: “What should I buy?”
I understand why. That’s the fun part.
But there is another question that can be just as important: “How much should I buy?”
Suppose you identify a fantastic stock that eventually triples. If you put only 1% of your portfolio into it, you made a terrific call. But that winner may not have a dramatic impact on your overall wealth.
Now consider the opposite situation. You get excited about a speculative company and put 25% of your money into it. Then the stock falls 50%.
That one mistake just cost you dearly. It might mean the difference between retiring early or waiting a few more years.
A vacation home – or downsizing in retirement.
That is why position sizing matters so much. Invest too little in your biggest winners, and they may barely move the needle. Invest too much in a risky position and one mistake can do serious damage.
A good coach understands this instinctively. Sometimes, you’ve got to be ruthless.
You don’t give every player the same number of minutes. Some deserve larger roles. Others are valuable in more limited situations. Sometimes a star who has already carried the team needs his workload reduced.
And if someone stops contributing, you eventually have to replace them.
A portfolio works the same way.
Your objective isn’t to maximize the amount of money you have in your favorite stock. It is to build the strongest overall portfolio.
Building the Roster
That idea has become especially important during the AI boom.
I, along with my InvestorPlace colleagues Luke Lango and 抖阴最新版, have spent years identifying opportunities in artificial intelligence. In fact, across our research, the three of us have issued 219 stock recommendations.
That creates a pretty nice problem. There is no shortage of ideas.
The harder question is deciding which ones actually deserve your investment dollars.
Now, you’re ultimately the only one who can determine that. But we want to give you tools to help. So, we recently went through our research and rebuilt the from the ground up. Rather than handing subscribers another enormous list of recommendations, we narrowed our research down to 19 stocks that we believe deserve a place in the portfolio today.
But we didn’t stop there.
For the first time, every position comes with a recommended allocation percentage:
- Strong Buys: 1.5X allocation
- Buys: 1X allocation
- Holds: 0.5X allocation
Each position is sized based on how we believe it fits into the larger portfolio. Those allocations are designed to balance opportunity against risk, prevent any one stock from dominating the strategy and make sure the individual pieces work together.
Think back to Popovich and Duncan. Tim Duncan was one of the greatest players in basketball history. But that didn’t mean Popovich had to play him 48 minutes every night.
Likewise, one of our favorite AI stocks can remain an excellent company without deserving an unlimited percentage of the portfolio.
And as conditions change, those roles can change too. A winner may grow into an outsized position and need to be trimmed. Fundamentals can deteriorate. Another company may present a better opportunity. Sometimes, a holding may simply stop fitting the way we want the portfolio constructed.
That’s why portfolio management is different from simply finding stocks.
Making the Math Easy
Of course, recommended percentages create another practical question: What does a recommended allocation actually mean for you?
That depends on how much money you have chosen to devote to the strategy.
So, we created the AI Revolution Position-Size Calculator.
You enter the total amount you’ve decided to allocate to the AI Revolution Portfolio. The calculator then applies our recommended allocation percentages and translates them into the number of shares to consider buying in each position.
You decide how much capital you want to put to work. We provide the portfolio blueprint. And the calculator does the arithmetic.
We’ve also recorded a special AI Revolution Portfolio Board Meeting, where Luke, Eric and I go through every position and explain why we own it, how it fits with the other holdings, what we’re watching and what could eventually cause us to sell or replace it.
In other words, we don’t simply show you the roster. We explain why each player is on it and the role we believe that player should have.
Manage the Team
The last time we significantly rebalanced the AI Revolution Portfolio, in December 2024, it went on to gain 58% through July 23. The NASDAQ gained 25% over the same period.
Past performance never guarantees future results, of course. But I think those results illustrate an important point.
Investing success isn’t always about finding one magical stock. It is about making a series of good decisions about what you own, what you don’t own and how much of your capital you put behind each idea.
That’s exactly what Popovich understood – and that’s why they were able to win one last championship together in 2014 before Duncan retired.
Because even when you have a legendary player, you still have to manage his role with the entire team in mind.
Again, we’ve had no shortage of amazing picks. For example, NVIDIA Corporation (NVDA) is one of my most famous calls. It’s up more than 4,700% since I initially recommended it. And in the AI Revolution Portfolio, it’s still in there.
But as far as we’ve come, I believe the AI Revolution still has a lot of room to run. And I want to maximize our chances of winning. So while you’ll still see stocks like this in the portfolio, there are also a lot of new, emerging stars that deserve your attention.
And I want to help you understand better how it should all fit together.
That’s exactly what Luke, Eric and I are trying to do with the newly rebuilt . We’ve selected 19 AI opportunities we believe deserve a place on the roster today, assigned recommended allocations to each one and built a tool that makes putting those allocations into practice much easier.
The new portfolio is live right now.
Sincerely,
抖阴最新版
Editor, Market 360
The Editor hereby discloses that as of the date of this email, the Editor, directly or indirectly, owns the following securities that are the subject of the commentary, analysis, opinions, advice, or recommendations in, or which are otherwise mentioned in, the essay set forth below:
NVIDIA Corporation (NVDA)
