In a recent LinkedIn post, Parin Mehta explores a fundamental principle in investing that often gets overlooked by newer market participants: position sizing. Drawing an analogy from the world of art, Mehta argues that understanding the right proportions is more critical than simply identifying the most beautiful subject.
Mehta opens by quoting Jerry Seinfeld, who stated, “The most important word in art is ‘proportion.’ How much? How long? When you have a sense of these things in balance, you have beauty.” This quote serves as the jumping-off point for Mehta’s discussion on a core investing concept.
“I love this quote because it connects to an investing principle I’ve been thinking about: Position Sizing.”
The author observes that many novice investors become fixated on the ‘what’ of investing – the specific asset or the entry price. While identifying a promising asset is important, Mehta suggests this focus is misplaced.
The Pitfalls of Chasing the ‘Perfect’ Asset
Mehta draws a parallel between art and investing, asserting that even a visually appealing subject can be ruined by incorrect proportions. In the investment world, this translates to the size of the bet placed on any given asset.
According to Mehta, a common mistake is to become overly enthusiastic about a single, potentially risky investment. “If we bet too big on a risky idea: one bad day can ruin our year,” he writes. This highlights the vulnerability that arises from concentrating too much capital into a single position, regardless of its perceived potential.
Conversely, Mehta points out the issue of under-allocating to a successful investment. “If we bet too small on a winning idea: a 5x gain barely moves the needle.” This means that even if an investor identifies a winner, insufficient position sizing can lead to underwhelming returns that don’t significantly impact overall portfolio growth.
“Many new investors are obsessed with the ‘what’ What asset? What price? We think if we just find the ‘right’ asset we will win.”
Shifting Focus from ‘What’ to ‘How Much’ and ‘How Long’
Through personal experience and reflection over the past few years, Parin Mehta states that he has learned to pivot his strategy. Instead of relentlessly searching for the “perfect asset,” his focus has shifted towards achieving the “right portfolio balance.” This involves a deliberate and disciplined approach to determining how much capital to allocate to each investment and for what duration.
Mehta emphasizes the resilience that comes from sound position sizing. He posits that “A mediocre portfolio with great position sizing will survive most scenarios.” This suggests that a well-managed portfolio, even with average asset selections, can weather market volatility and downturns effectively.
In contrast, he warns about the fragility of portfolios with poor position sizing, stating, “A great portfolio with reckless sizing might eventually go to zero.” This stark warning underscores the potential for even the most brilliant investment ideas to lead to catastrophic losses if not managed with appropriate capital allocation.
“Through many mistakes over the last few years I’ve learnt to stop looking for the perfect asset – and to start looking for the right portfolio balance.”
Mehta concludes by prioritizing the critical questions of allocation and holding periods over the selection of the asset itself. As he puts it:
“How much should I hold and for how long?” > “What should I buy?”
Parin Mehta’s insights on LinkedIn offer a valuable perspective for investors seeking to build more robust and resilient portfolios by mastering the art of position sizing.
📝 About This Content
This article is based on insights shared by Parin Mehta on LinkedIn.
📅 Originally posted on November 21, 2025 | View original post on LinkedIn →