Portfolio Management – The Basics

The key building blocks of my approach to portfolio management are to keep risks tightly managed and to develop an easy to follow method of identifying opportunities to buy and sell. I try to keep these goals at the forefront of my thinking to tilt the odds of making money in my favour.

When I was younger, I was regularly pitched with Get Rich Quick schemes that sounded absolutely delusional; simple, easy to follow and somehow undiscovered by the general public. Of course, I always tried to remember my Grandfather’s advice “a fool and his money are easily parted”.

My strategy is similar, but unlike the muppets that will convince you that they have an easy way to make millions for a small, one off fee, my strategy is honest, realistic and justifiable.

Over time, I’ve developed a list of issues, values, concerns and techniques that, if followed, should make money over a period of years. I can’t be absolutely certain of the outcome but thus far, it’s worked pretty well (although, not without a few painful hiccups along the way).

I’m always adapting this system as I learn. Partly, because what works for a few years won’t work forever, but also because the vast majority of opportunities are time-constrained. By time-constrained, I simply mean that whilst a company may have a few years (or if excellent, decades) of relative outperformance, they will inevitably be overtaken by competitors over time.

Keeping things simple

I don’t think I’m unique in saying that most people reading this blog lead pretty hectic lives. Years ago, I had a fantastic idea that I was going to create a whole suite of material here on The Ethical Entrepreneur. But we’re all busy with demanding jobs, families, social commitments, sports, travel, illnesses and the myriad of ‘life administration’ which invariably sacks us over the head and jumps on us when we’re down every time we think we have a spare moment.

As such, I’m a huge advocate of keeping things simple. I believe there’s money to be made through active management – day trading, position trading, forex trading etc. but the reality is that the majority of us have too little time, energy and understanding to make a success of it (backed up by some scary statistics that over 75% of retail day traders lose money).

So instead of ‘getting rich quick’ I’m a big fan of ‘getting rich slowly’. Reading, reading, reading, analysing, thinking, pondering, and then maybe placing the occasional trade and watching it for months – if not years.

If you’re looking at one of those Contract for Difference platforms and thinking ‘how hard could it be?’ – don’t be a fool, take a step back and remember; if it was easy, everyone would do it. If it’s so easy to make hundreds of thousands of pounds a year from your mobile phone, why are these people teaching you and not on a beach, surrounded by bikini-clad babes and generally living the dream?

The process

  • Diversify
  • Thinking and hold long-term (yes, that means longer than a week…)
  • Consider your portfolio, not just individual positions
  • Buy tranches of a company as your confidence grows
  • Keep a trading diary
  • Don’t panic
  • Minimise costs and taxes
  • Monitor performance but don’t obsess over it

Selecting companies

  • Buy quality
  • Buy value
  • Buy income and reinvest it
  • Don’t ignore momentum
  • Avoid story stocks with weak balance sheets or negative cash flow
  • Avoid downside risk


  • Be calm and methodical in all things – buying, selling and reviewing
  • Don’t be greedy or fearful
  • Be patient – there are always more opportunities but capital is limited
  • Control what you can control and don’t stress about the rest
  • Be realistic
  • Remember that you’re a small fish. Don’t get eaten by a shark.


Reading the list above might feel a little overwhelming. Where on earth do you start? How could you remember all of it? Well, partly, you’ll notice a bit of similarity between some of the elements; not panicking and being calm, for example. I’m intending to do some coverage of these rules in more detail but I thought readers would find it useful to see the full list as an ‘index’ for future reference.

I’m thinking of developing the site further this year – since its last upgrade in 2018 a few elements have gone a bit squiffy and I’m not entirely happy with them. I’m planning on utilising a bit more ‘cornerstone’ content this year and then writing some themed posts to develop these further,

Of course, the list above isn’t entirely exhaustive and I may come back to add future items and ideas as my experience grows. I’m trying to make a bit more of my presence of Twitter moving forward so watch this space for updates!

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