Chapter 5: How I Built a Portfolio I Can Live With - In Good Times and Bad
This is Chapter 5 of my book Mastering Value Investing: Practical Strategies for Real-World Results. Go there for links to the other chapters.
Most investors think diversification reduces risk. They are only half right.
If diversification were the magic answer, owning 100 stocks would make you rich and safe. But in reality, many diversified portfolios quietly underperform - not because investors took too much risk, but because they misunderstood what risk actually is.
This chapter challenges the comfortable myths most investors rely on. Risk is not volatility. It is not short-term price swings.
Risk is permanent capital loss - and portfolio construction is one of the most underappreciated tools for preventing it.
Inside this analysis, you will see why portfolio construction is not an afterthought, but a core risk-management system. Not through formulae or academic theory, but through practical decisions every investor must make.
You will also see real-world examples that challenge conventional wisdom - showing that both concentrated and diversified portfolios can succeed, but only when guided by structure, discipline, and clarity of intent.
This is not about chasing the next hot stock. It is about building a portfolio you can live with without being forced into emotional decisions.
What is deliberately missing from this public summary? Exact portfolio rules. Allocation ranges. Capital sizing logic. And the full framework that ties everything together.
If you want the complete playbook - the structure behind the conviction, not just the philosophy – you will need access to the full chapter.
🔒 The complete chapter is available to subscribers.
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Disclaimer & DisclosureI am not an investment adviser, security analyst, or stockbroker. The contents are meant for educational purposes and should not be taken as any recommendation to purchase or dispose of shares in the featured companies. Investments or strategies mentioned on this website may not be suitable for you and you should have your own independent decision regarding them.
The opinions expressed here are based on information I consider reliable but I do not warrant its completeness or accuracy and should not be relied on as such.
I may have equity interests in some of the companies featured.
This blog is reader-supported. When you buy through links in the post, the blog will earn a small commission. The payment comes from the retailer and not from you.
Disclaimer & Disclosure
I am not an investment adviser, security analyst, or stockbroker. The contents are meant for educational purposes and should not be taken as any recommendation to purchase or dispose of shares in the featured companies. Investments or strategies mentioned on this website may not be suitable for you and you should have your own independent decision regarding them.
The opinions expressed here are based on information I consider reliable but I do not warrant its completeness or accuracy and should not be relied on as such.
I may have equity interests in some of the companies featured.
This blog is reader-supported. When you buy through links in the post, the blog will earn a small commission. The payment comes from the retailer and not from you.
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