The Microcap Minute Classroom. Module 10, chapter 2: Position sizing: how much of any one thing you may own <div class="learn" markdown="1"> **What you will learn** - What a "position" is and what "position sizing" means - Why the size of a bet matters more than which bet you pick - Simple sizing for pocket money and for grown-up portfolios - How the world's most famous investor spreads his money, with proof from a real filing </div> Picture an Indian thali. It never arrives as one giant bowl of a single dish. It arrives as many small katoris: a little dal, a little sabzi, some roti, some rice. If one dish turns out badly, the meal still works. Your money deserves the same arrangement. This chapter is about how big each katori is allowed to be. A position is the amount of one particular thing you own. If you own shares of Apple and nothing else, you have one position. Position sizing means deciding what share of your total money goes into any single position. It sounds technical, but it is just the question: how much of my money am I willing to tie to one company's fate? ## Why size matters more than the pick Remember chapter 1: lose half your money and you must double what remains just to get even. Now watch how sizing changes everything. Say you have ₹10,000 saved up (about $120). You put it all into one company, and that company fails completely. You have lost ₹10,000. Game over, see chapter 1. Now say instead you put only 5% into that same company. Five percent means one-twentieth: ₹500. The company fails completely. You lose ₹500. It stings, you learn from it, and ₹9,500 is still standing. Same company, same failure, completely different ending. The only thing you changed was the size. ## A rule of thumb, honestly stated Many careful investors keep any single company somewhere between about 2% and 10% of their money. There is no magic number, and anyone who promises one is guessing. The honest rule is: small enough that a total loss does not break your plan or your sleep. When you are young and learning, stay at the small end. You are buying practice, not a jackpot. For pocket money of ₹2,000 (about $24), a 5% position is ₹100. It feels silly-small, and that is fine: the lesson is the point at this age. For a grown-up portfolio of $10,000 (about ₹8.5 lakh), a 5% position is $500 (about ₹42,000). Same rule, bigger plate. Our own weekly list at The Microcap Minute follows the same shape: it holds ten names, so no single company can be more than about a tenth of it. Ten to fifteen names, no more, is a common answer to "how many companies are enough", and ten is what we print. ## Even Buffett spreads his plate Warren Buffett is the most famous investor alive, and his company is called Berkshire Hathaway. Large US money managers must file a form called a 13F with the SEC every three months. A 13F is a public list of the US stocks that manager holds, with the value of each. It is literally a look at their thali. Notice that each row is one company with a value beside it, and the table goes on and on: dozens of positions, not one. Apple is Berkshire's biggest position, yet it is still one row among many. The most celebrated stock-picker in history does not put everything on one name. That should tell you something. Owning several different companies so that one bad surprise cannot sink you has a name: diversification. It is the polite word for the thali. Notice how the tracker keeps every holding side by side, so you can see your slice sizes at a glance instead of guessing. ## The honest part Sizing feels like a speed bump exactly when you are most excited. You found a company you love, and every fibre of you wants to go big. That feeling is normal, and it is precisely when the rule protects you. Decide your slice when you are calm, before you buy, and never renegotiate it mid-excitement. <div class="try" markdown="1"> **Try it yourself** Take a paper and pen. Imagine ₹10,000. Case A: one position of ₹5,000. Case B: ten positions of ₹1,000 each. Now imagine one company in your portfolio falls 60%. Work out the total damage in Case A and in Case B, in rupees and as a percentage of the ₹10,000. Write both answers down and look at them. That difference is this entire chapter in two numbers. </div> <div class="takeaways" markdown="1"> **Key takeaways** - A position is what you own of one thing; position sizing is how big a slice of your money it gets. - The size of a bet decides whether a total loss is a lesson or a funeral. - A common range is about 2% to 10% per company; the real rule is "small enough to survive". - Even Warren Buffett's Berkshire Hathaway spreads across dozens of companies, as its 13F filings show. - Fix your sizes when calm, and never raise them mid-excitement. </div> **Read one real thing:** [Berkshire Hathaway's 13F filings on EDGAR](https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001067983&type=13F). Open the newest one, find the information table, and notice how many companies sit in the world's most watched portfolio.. I am Ritu, a synthetic voice, and the words I am reading are Ayush Agrawal's.

# Position sizing: how much of any one thing you may own <div class="learn" markdown="1"> **What you will learn** - What a "position" is and what "position sizing" means - Why the size of a bet matters more than which bet you pick - Simple sizing for pocket money and for grown-up portfolios - How the world's most famous investor spreads his money, with proof from a real filing </div> Picture an Indian thali. It never arrives as one giant bowl of a single dish. It arrives as many small katoris: a little dal, a little sabzi, some roti, some rice. If one dish turns out badly, the meal still works. Your money deserves the same arrangement. This chapter is about how big each katori is allowed to be. A position is the amount of one particular thing you own. If you own shares of Apple and nothing else, you have one position. Position sizing means deciding what share of your total money goes into any single position. It sounds technical, but it is just the question: how much of my money am I willing to tie to one company's fate? ## Why size matters more than the pick Remember chapter 1: lose half your money and you must double what remains just to get even. Now watch how sizing changes everything. Say you have ₹10,000 saved up (about $120). You put it all into one company, and that company fails completely. You have lost ₹10,000. Game over, see chapter 1. Now say instead you put only 5% into that same company. Five percent means one-twentieth: ₹500. The company fails completely. You lose ₹500. It stings, you learn from it, and ₹9,500 is still standing. Same company, same failure, completely different ending. The only thing you changed was the size. ## A rule of thumb, honestly stated Many careful investors keep any single company somewhere between about 2% and 10% of their money. There is no magic number, and anyone who promises one is guessing. The honest rule is: small enough that a total loss does not break your plan or your sleep. When you are young and learning, stay at the small end. You are buying practice, not a jackpot. For pocket money of ₹2,000 (about $24), a 5% position is ₹100. It feels silly-small, and that is fine: the lesson is the point at this age. For a grown-up portfolio of $10,000 (about ₹8.5 lakh), a 5% position is $500 (about ₹42,000). Same rule, bigger plate. Our own weekly list at The Microcap Minute follows the same shape: it holds ten names, so no single company can be more than about a tenth of it. Ten to fifteen names, no more, is a common answer to "how many companies are enough", and ten is what we print. ## Even Buffett spreads his plate Warren Buffett is the most famous investor alive, and his company is called Berkshire Hathaway. Large US money managers must file a form called a 13F with the SEC every three months. A 13F is a public list of the US stocks that manager holds, with the value of each. It is literally a look at their thali. Notice that each row is one company with a value beside it, and the table goes on and on: dozens of positions, not one. Apple is Berkshire's biggest position, yet it is still one row among many. The most celebrated stock-picker in history does not put everything on one name. That should tell you something. Owning several different companies so that one bad surprise cannot sink you has a name: diversification. It is the polite word for the thali. Notice how the tracker keeps every holding side by side, so you can see your slice sizes at a glance instead of guessing. ## The honest part Sizing feels like a speed bump exactly when you are most excited. You found a company you love, and every fibre of you wants to go big. That feeling is normal, and it is precisely when the rule protects you. Decide your slice when you are calm, before you buy, and never renegotiate it mid-excitement. <div class="try" markdown="1"> **Try it yourself** Take a paper and pen. Imagine ₹10,000. Case A: one position of ₹5,000. Case B: ten positions of ₹1,000 each. Now imagine one company in your portfolio falls 60%. Work out the total damage in Case A and in Case B, in rupees and as a percentage of the ₹10,000. Write both answers down and look at them. That difference is this entire chapter in two numbers. </div> <div class="takeaways" markdown="1"> **Key takeaways** - A position is what you own of one thing; position sizing is how big a slice of your money it gets. - The size of a bet decides whether a total loss is a lesson or a funeral. - A common range is about 2% to 10% per company; the real rule is "small enough to survive". - Even Warren Buffett's Berkshire Hathaway spreads across dozens of companies, as its 13F filings show. - Fix your sizes when calm, and never raise them mid-excitement. </div> **Read one real thing:** [Berkshire Hathaway's 13F filings on EDGAR](https://www.sec.gov/cgi-bin/browse-edgar?action=getcompany&CIK=0001067983&type=13F). Open the newest one, find the information table, and notice how many companies sit in the world's most watched portfolio.

That was chapter 2 of module 10. The text, the pictures and the exercise are on the lesson page. Thank you for listening.