The process · Step 6 of 6
Portfolio & monitoring
Does it fit your position size and monitoring capacity?
Why this step
The first five steps answer "is the company good?". Step 6 asks: "does a position fit me, my portfolio and my actual monitoring capacity?" — even an excellent company can be an unsuitable position.
Three guiding questions before sizing
- What is the maximum position size, measured against a portfolio share you could bear in a total-loss case?
- How many comparable positions with a similar risk profile already exist?
- How realistic is regular monitoring — reports, ad-hoc announcements, capital-market dates?
Result
Three possible outcomes: keep monitoring (fixed rhythm), watchlist with a date (concrete review date), or final exclusion (a step-2 criterion confirmed or worsened).
Typical mistakes
- Adjusting position size after the fact to match your own conviction.
- Checking concentration risk only at the single-stock level, not across correlated positions.
- Running a watchlist position without a concrete review date.
Example logic
Example (no reference to a real company): A liquidity check shows that exiting the intended size would take several weeks at 15 percent of average daily volume. The size is wrong, not the stock — it is reduced until an exit within a few trading days is realistic.
Frequently asked questions
How often should a position be re-assessed?
A fixed rhythm, e.g. after each quarterly report, is more reliable than a purely event-driven approach.
Is a watchlist position a buy recommendation?
No — it is solely a review date for running through the process again in full.
What triggers monitoring between reports?
Ad-hoc announcements, capital measures, changes on the board, auditor or a material change in free float.