Unlike Fixed ratio position sizing…

Constant mix position sizing states that you should always try to maintain the ORIGINAL fractions that you set for each stock in your portfolio.

Imagine you have $1,000, and split it across just two stocks, investing $500 into Apple and $500 into Google .

So each stock makes up exactly 1/2 of your portfolio

Congrats! Your Apple stock doubles to $1,000, so your total portfolio value is now $1500.

($500 Google + $1,000 Apple = $1,500)

This gain is great, but now your position sizes are different than what you originally intended:

Apple is now 2/3rds of your portfolio, and Google is only 1/3rd.

To practice constant mix, you need to sell some Apple shares and buy more Google.

But how much do you sell or buy?

Well, you need to find the exact amount to sell or buy to get each stock’s amount to be equal, as you originally intended.

See if you can figure out this number before you go to the next slide.

In this case, you’d sell $250 of Apple, and then use that $250 to buy Google, so that each stock's position size is $750.

Selling your winners to buy other stocks to keep your portfolio balanced is called rebalancing.

Rebalancing is not a one-time event.

constant mix says to keep checking and adjusting your stocks over time to stay true to your original position sizes.

Take a look at your Portfolio Analysis to see how balanced your portfolio is now!