At noon reviewed direct in the lobby

Position Sizing Is a Decision About What You Can Afford to Be Wrong About In the current market environment, where headlines move faster than fundamentals, the most valuable discipline I bring to client portfolios is not stock selection. It is position sizing. The question is never simply "what should we own?" It is "how much of the portfolio can tolerate being wrong about this idea?" Why Size Matters More Than Conviction Conviction is often confused with certainty. A high-conviction view that is sized too large can destroy a portfolio even when the thesis is eventually proven correct. The path matters. Drawdowns of 30-40% force behavioral mistakes—clients redeem, committees override, and the position is sold at the worst moment. Sizing should be set so that the maximum plausible loss on any single idea stays within the portfolio's pain threshold. That threshold is different for every client, and it is my job to know it before markets test it. In practice, this means I think in terms of scenarios, not point forecasts. For each position, I ask: what is the downside if the macro backdrop shifts, liquidity dries up, or the thesis takes twice as long to play out? If the answer exceeds what the client can psychologically and financially absorb, the size is wrong—regardless of how attractive the risk-reward looks. Liquidity Is a Feature, Not a Constraint Liquidity is often treated as an afterthought, but it is the silent governor of portfolio behavior. In calm markets, it feels like a non-issue. In stress, it becomes the only issue. I build portfolios with an explicit liquidity budget: a portion of assets that can be deployed or exited within days, not weeks. This is not about market timing; it is about preserving optionality. When volatility spikes, the portfolios I manage can act decisively because they are not trapped in positions that cannot be unwound without moving the market against us. For private clients in Singapore, where capital is often tied to business interests or property, the portfolio's liquidity profile must be aligned with their broader cash flow needs. A portfolio that looks diversified on paper but is illiquid in practice is a risk in disguise. Volatility Is Information, Not Noise Volatility does not tell you what to do, but it tells you what the market is pricing. Elevated implied volatility often signals that the consensus is fragile. In those moments, I reduce the size of directional bets and increase the quality of the assets held. This is not about predicting the next move; it is about respecting that the range of outcomes has widened. When volatility is low, it is tempting to take on more risk because it feels safe. That is exactly when I check whether the portfolio is being compensated for the risks it is actually taking. Staying Rational While Markets Move Quickly The hardest part of portfolio management is not analysis; it is behavior. Markets move quickly, and the temptation to react—to chase a rally or flee a drawdown—is powerful. I counter this with a simple rule: every adjustment must be tied to a pre-defined trigger or a change in the thesis, not to the emotion of the day. This is why I document the rationale for each position at inception. When the market moves, I revisit that document before I revisit the position. It keeps me honest and keeps clients calm. For affluent investors, the goal is not to beat a benchmark every quarter. It is to compound wealth at a rate that preserves purchasing power and supports the lifestyle and legacy they have built. That requires a portfolio that can survive its own mistakes. Position sizing is the first line of defense. If you are evaluating how your own portfolio handles volatility, ask yourself: what is the largest loss you could sustain on a single position without changing your long-term plan? If you do not know the answer, that is the place to start. This content is for informational purposes only and does not constitute investment advice. Please consult a qualified advisor regarding your specific circumstances.