Updated: Mar 26, 2021
Do you wonder how much to buy from each stock?
It is going perfectly you got the money to invest, you’ve checked that the market will go up, you’ve prepared the research on stocks and selected the very best of them just like Warren Buffett. Last step of the investment process is to assign weights to your chosen stocks and after that you can buy them. In other words assign weights is basically how you are going to distribute your investment budget across selected stocks. In essence this is the heart of investing in stock market, and it is also know as portfolio management. Different kind of investors have different approaches to do that, however it can be synthesized in 5 main categories. The way you assign weights determines what kind of a investor you are. So check in the below table the 5 major approaches to portfolio construction and their good and bad sides: