A stock idea is a starting point. A portfolio needs a plan.

A company looks promising. You understand its business, agree with the investment case and decide it deserves a place in your portfolio.

But how much should you buy? Does it add something different to your existing holdings? And what would make you reduce the position or sell it?

The same stock can create different risks

Consider two investors buying the same company at the same price.

For one, it represents a small part of a diversified portfolio. For the other, it accounts for nearly half their investments.

They own the same stock, but they have taken very different risks. A sharp fall could be manageable for the first investor and deeply disruptive for the second.

Good ideas can overlap

Several holdings might depend on the same industry, customer demand or economic conditions. They can look like separate investments while responding similarly when markets change.

A portfolio therefore needs a view of the whole: how its holdings fit together, where exposure is concentrated and what a new position changes.

Decide how you will respond

The investment case may change after you buy. The price may rise quickly, the company may disappoint, or another holding may become a much larger part of the portfolio.

A portfolio plan helps establish:

• Position size: How much exposure can one holding have?
• Review conditions: What information should prompt another look?
• Portfolio changes: When should an allocation increase, decrease or remain unchanged?
• Exit conditions: What would make the position no longer appropriate for the strategy?

Those decisions can involve judgement, algorithmic rules or a combination of both. What matters is having a coherent approach that can be followed and reviewed.

Where algorithm-driven portfolios fit

An algorithm-driven portfolio connects decisions about selection, allocation and changes through a defined process.

That does not make every algorithm a good investment strategy. Its assumptions can be weak, its controls insufficient or its historical results misleading. A detailed research recommendation can also include allocation guidance, follow-up and exit conditions.

A long-term goal needs ongoing decisions

A long-term investment horizon does not remove the need to review a portfolio. It gives those reviews a purpose: keeping decisions connected to the approach you chose, rather than reacting to every market move.

Fundgazer's algorithm-driven portfolios are designed around this portfolio-level approach. Investors can examine each strategy's overview, historical simulations and eligible assets to understand more than its stock list.

Before choosing a strategy, try explaining its approach without mentioning the return figure. Can you describe how it selects holdings, manages allocations and responds to change?

Explore our portfolios to see how individual investment decisions fit into a defined strategy.