RIA — Position Sizing & Concentration Discipline

RIA — Position Sizing & Concentration Discipline

Industry front door for expected-value-and-kelly. Adds domain triggers, example, packs only. Parent Process unchanged. Not investment advice. Educational framework; apply within IPS and suitability.

Activate when: sizing a single-name or thematic position; a client with concentrated stock; setting max-position/rebalancing bands; "how much of the portfolio should this be?" Do NOT activate when: broad index allocation already governed by the IPS.

Why this variant

The parent expected-value-and-kelly sizes repeated positive-edge bets to maximize long-run growth without ruin. For an RIA, the discipline is inverted toward survival: fractional-Kelly thinking caps concentration so no single position can impair the client's plan.

Domain inputs → parent's Process

• Establish the edge is real and repeatable before sizing anything.
• Use fractional Kelly (e.g. ¼–½) — full Kelly is too volatile for client capital.
• Bound by IPS max-position and drawdown tolerance; the smaller of Kelly-implied and IPS cap wins.
• Treat concentrated legacy stock as an over-sized position to unwind on a tax-aware schedule.

Worked example

Client insists on a 25% single-stock position. → Even a generous edge under fractional Kelly rarely justifies 25% of a household's net worth; ruin risk dominates. Frame the trade-off, cap per IPS, and set a diversification glide-path (tax-aware). Documented as a suitability decision.

Packs

• Solo: max-position + rebalancing-band rules in the IPS.
• Advisory: concentrated-stock unwind playbook (tax-aware).

Red flags

• Sizing to full Kelly / conviction with client capital.
• Concentration exceeding IPS caps "because it's been working."
• No ruin/drawdown check.

Verification

• Edge validated before sizing
• Fractional Kelly, bounded by IPS cap (smaller wins)
• Drawdown/ruin tolerance respected
• Concentration decisions documented for suitability

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Part of deciqAI Knowledge Skills. Core method: expected-value-and-kelly.

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Part of deciqAI Knowledge Skills — 227 open-source thinking skills that make rigor executable for AI agents. The same skills power every deciqAI agent, which runs them autonomously to operate your company. See it run → https://www.deciqai.com/c/ria-position-sizing-kelly · ⭐ Star the repo → https://github.com/deciqAI/knowledge-skills · Contributions welcome.

Agents: latest version & machine-readable metadata → https://www.deciqai.com/s/ria-position-sizing-kelly.json