Portfolio Design

# Portfolio Design

Portfolio design is the strategic construction of a stock collection that balances growth potential, risk management, and diversification across 12-20 carefully selected companies.

## Key Points

- **Hold 12-20 stocks**: Optimal diversification without over-complication
- **Target Quality 60+**: Preferably 70+ for each holding
- **Aim for Sweet Spot PAR**: Portfolio PAR of MIPAR+5% to +10%
- **Diversify by industry**: Spread across 6-8 different industries
- **Review quarterly**: Rebalance using Dashboard metrics


## The Basics

A properly designed portfolio serves as your foundation for long-term wealth building. The Manifest Method emphasizes quality over quantity—fewer stocks you understand well outperform many stocks you don't. Research shows that portfolios with 12-20 stocks capture most diversification benefits while remaining manageable for individual investors.

The key is focusing on two primary characteristics: return potential (PAR) and company strength (Quality Rating). Every stock in your portfolio should contribute to your overall return expectations while maintaining acceptable quality standards.

### Core Portfolio Metrics

| Metric | Target Range | Why It Matters |
|--------|--------------|----------------|
| Number of Stocks | 12-20 | Adequate diversification without over-complication |
| Quality Rating | 60+ (prefer 70+) | Financial strength and predictable earnings |
| Portfolio PAR | MIPAR+5% to +10% | Sweet Spot for optimal risk-adjusted returns |
| Industry Spread | 6-8 different industries | Reduces sector-specific risk |
| Position Size | 3-8% per stock | Prevents over-concentration |

## On the Platform

Manifest Investing's Dashboard system makes portfolio design straightforward. Your Portfolio Dashboard displays real-time Quality Ratings, PAR calculations, and diversification metrics for all holdings.

**Key Dashboard Features:**
- **Quality Overview**: Color-coded ratings (blue for 80+, green for 65-79)
- **PAR Analysis**: Shows individual stock and portfolio-wide return expectations
- **Diversification View**: Industry breakdown and position sizing
- **Sweet Spot Indicator**: Highlights stocks in the optimal PAR range

### Portfolio Construction Steps

1. **Start with Quality**: Screen for companies with Quality Ratings of 60+
2. **Check PAR**: Focus on stocks with PAR in or near the Sweet Spot
3. **Diversify by Industry**: Limit exposure to any single sector
4. **Size Positions**: Keep individual holdings between 3-8% of portfolio
5. **Monitor Regularly**: Review quarterly and rebalance as needed

## Managing Your Portfolio

Portfolio design isn't a one-time activity. Market conditions change, companies evolve, and new opportunities emerge. The three primary reasons to adjust your portfolio:

- **Personal needs**: Life circumstances requiring capital
- **Deteriorating fundamentals**: Companies showing declining Quality Ratings
- **Better opportunities**: Replacing weaker holdings with stronger prospects

Remember: Portfolio decisions should always be portfolio-centered, not driven by emotional attachment to individual stocks or tax considerations.

## Learn More

- [Understanding Quality Ratings](/guide/core-concepts/quality-rating)
- [PAR Analysis](/guide/core-concepts/par)
- [Using Dashboards](/guide/using-the-platform/dashboards)
- [When to Sell](/guide/making-decisions/when-to-sell)