**Title: Understanding the Selection Process and Weight Allocation in our Portfolio | Investing Insights**
Welcome to our YouTube channel where we provide valuable insights into our investment strategies. In this video, we will discuss how we select stocks for our portfolio and the factors that determine their weight allocation.
One of the key aspects of our process is the direct connection between idea generation and portfolio inclusion. The stocks that emerge as the most favored from our research are given the highest weights in our portfolio. But what exactly drives the weight of a stock in our portfolio? Let’s dive in.
Unlike the traditional indexed approach, where capital allocation is based on the proportion of a business’s index share, our approach focuses on expanding economic value. We allocate capital to businesses with the potential for growth in intrinsic value, rather than declining intrinsic value. This ensures that our portfolio is positioned to capture long-term economic value.
Our conviction in a stock is determined by a combination of factors. We take into consideration the current valuation of the stock, as well as our earnings forecast and projected terminal values. These inputs, along with a thorough analysis conducted by our dedicated team, help us determine the highest return opportunities in the market.
Emotion is removed from the equation when it comes to allocating capital to stocks in our portfolio. Our portfolio construction systems calculate the optimal weight allocation based on objective factors, such as the internal rate of return (IRR) and the share price. This allows us to make rational decisions based on data, maximizing the potential returns for our investors.
By adhering to this disciplined approach, we ensure that our portfolio is constantly optimized for the highest potential returns, while also taking into account the associated risks. Join us in this video as we delve deeper into the selection and weight allocation process, offering valuable insights that will empower you as an investor.
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