Concentrated investing is not the same as careless investing. It is a decision to let a small number of ideas have a meaningful effect on your result, while accepting that being wrong will hurt more.
I run a concentrated main portfolio. That is a personal choice, not a template for anyone else. I am trying to own fewer businesses that I understand deeply rather than a larger list that gives the appearance of safety without real conviction.
What concentrated investing means to me
A concentrated portfolio is not defined by a magic number of holdings. It is defined by whether the biggest positions can materially change the outcome. In my case, Rocket Lab became a position large enough that it could move the main ISA meaningfully in either direction.
I wrote about why I made Rocket Lab roughly 50% of my portfolio because a decision that large should be documented before its outcome is obvious.
The case for fewer, higher-conviction positions
The potential benefit is focus. With fewer businesses to follow, I can spend more time understanding the thesis, the risks and the evidence that would change my mind. That does not guarantee good outcomes. It just makes the decision process more visible.
There is also a difference between diversification and simply owning more tickers. If I cannot explain why I own something, what would invalidate the thesis and what role it plays in the portfolio, the extra holding may not be reducing the risk that matters.
The risks are real
Concentration magnifies mistakes. A missed execution target, financing need, valuation reset or wider market drawdown can hurt far more when a position is large. It can also make ordinary volatility emotionally difficult to sit through.
That is why I do not describe concentration as safe. The point is not to pretend the risk away. The point is to decide whether the potential upside is worth the risk, then keep testing that decision honestly.
My checks before adding to a position
- Can I explain the business and the core thesis in plain English?
- What would make me reduce or sell the position?
- Am I adding because the thesis improved, or because I want a falling price to stop hurting?
- Would I still be comfortable owning it if the share price fell further?
- Is the position size consistent with the risk I am actually taking?
Document the decision before the result
The most useful discipline is recording why I made a decision before I know whether it works. That creates a more honest record than rewriting a story after a gain, or pretending a loss was unforeseeable.
My monthly portfolio reviews are part of that process. They show what changed, where conviction increased and where I could be wrong. The live Portfolio page shows the current IBKR ISA snapshot separately from the Trading 212 challenge.
This is a personal investing framework, not financial advice. A concentrated portfolio can create large losses as well as large gains.