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Re: Bud Powell post# 315724

Saturday, 06/19/2021 10:05:44 AM

Saturday, June 19, 2021 10:05:44 AM

Post# of 519097
"Overweight" in a stock has to be seen in context: Given your circumstances, what are reasonable risks and what are your goals?

If you have minimal assets, you cannot afford to take a significant financial hit and should therefore be careful to be well diversified. If you are very well funded, or have a very secure financial base otherwise (such as a good pension), you can afford this type of risk/reward play. If your considered strategy is to try to get very wealthy no matter what, an overweight position in a promising stock is likely your best bet. Or maybe you do actually have a talent for spotting a winner.

By the way, if you have initially invested a "prudent" fraction of your wealth in Anavex a while back and now find yourself "overweight" in the stock, does this really represent a growing risk to your financial security? No, it doesn't, not if your other assets have not suffered in the meantime.

This Overweight concept is just a rule of thumb. It is a simplification that works for most investors. It is not a universal truth. Some of us here are properly heavily concentrated in this stock and, I am sure, some of us are dangerously Overweight. Rules of thumb are helpful but are a bit too crude to control your life.
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