📖John Neff
Position Sizing Discipline
Size positions based on conviction and risk.
The size of your position should reflect your conviction and the risk involved. Never bet so large that a single mistake can wipe out your portfolio.
🏠 Everyday Analogy
📖 Core Interpretation
John Neff views portfolio construction as risk architecture. Allocation, position sizing, and rebalancing rules determine whether you can stay disciplined across market regimes.
💎 Key Insight：Proper position sizing prevents catastrophic losses.
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❓ Why It Matters
Without portfolio rules, decisions become reactive and concentrated. Sustainable returns come from controllable risk exposure, not one-off bets.
🎯 How to Practice
Set target allocation by risk tolerance, rebalance by rules rather than headlines, and prevent hidden concentration from dominating portfolio behavior.
⚠️ Common Pitfalls
Diversifying superficially without true risk balance
Skipping rebalancing rules and drifting style
Judging portfolio health by short-term returns only
📚 Case Studies
1
Exiting Overvalued Retailers (1991)
After a strong late-1980s run, Neff sold or cut retail names whose prices outran their earnings power, despite continued market enthusiasm.
✨ Outcome：Subsequent multiple compression hurt many retailers; Windsor under Neff avoided larger drawdowns and rotated capital into better risk‑reward stocks.
2
Ford Motor Recession Bargain (1973)
During the 1973–74 bear market, Neff bought Ford at a low P/E when auto demand slumped and sentiment was extremely negative.
✨ Outcome：As the economy recovered, Ford’s earnings rebounded and the stock price rose several-fold over the following years.
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