I track only a few of your listed companies, so I cannot be stock specific. But, I see you have a lot of companies in your portfolio. Was capital deployed equally amongst these? If yes then there will not be more than 4% in any position.
Essentially, this boils down to the question between diversification and concentration. I believe some level of concentration is required to let your winners make good contribution to overall portfolio. High conviction bets must be a greater share of your portfolio.
For me, high conviction = (Valuation with good margin of safety) + (Long growth runway) + (Good management).
Just sharing my view here. Happy to debate about these issues.
Please note, that my suggestion does not constitute investment advice. I am a novice investor myself and any suggestions from my end are for discussion purpose only. You should seek the advice of other more experienced investors. Also, there are a number of threads on this forum where such issues have been debated and you might get more insight from these.
Having said, it appears to me now that you’ve gone to the other end of the spectrum of concentration. I would be uncomfortable having such large positions. My average position would be 8-10% with biggest position around 15-20%. I don’t know about the stocks you’ve invested in, so I can’t be stock specific.
Ok sir… I understood your words… I have decided to check the concept ’ concentration’. And I fully responsible for my action… you have just discussed the concepts…
The concept of concentrated portfolio is for those who study in depth and are full time into stock investing.For other people,it is better to have 20-25 stocks so that even if we are wrong ,we do not loose much…On downside,gains are also limited by this.Any ways it is not advisable to have more than 10% in any stock.
Just my piece of advice .I am 10 yrs into stock investing
As mentioned by ajit dhake, for guys involved with concentrated investing its absolutely essential to know what they are doing when they are investing. For each of the company in your portfolio, you should be conversant about the business model, its risks, triggers and investment arguments. Since there are only few stocks in your portfolio I suggest you try to make a small note on each of the companies you own so that your investment thesis is covered. Of late there is also a suggestion about including a reason to sell in your investment thesis though thats an individual call.
Diversified Portfolio more or less resembles a mutual fund scheme… upside and downsides both are capped…,concentrated portfolio can have huge upside with equal risk of downside… but PROPER selection of stocks with PATIENCE to wait till theme plays out and business matures should garner good gains in a concentrated portfolio…,
Thank you everyone for your valuable guidance and concern.
If I diversify ‘my portfolio’ much more, it becomes a mutual fund. I think, AMCs can better manage MFs. I wish to try something different. I have read, it is useful for retail investors to build ‘concentrated’ portfolio, than ‘diversified’ portfolio - to get more returns (bets should be good)… I feel that I have chosen some good bets available at cheap price…
Investing in India has its own risk of limited quality management, poor corporate governance and forever changing business policies by Indian government. Hence I strongly feel one should have 10-20 stocks to spread the risk.
Also too much concentrated investment on just midcaps has its own downfall during market meltdown, hence its always better to have 20-25% in large caps. The downfall is double wammy compared to the uptrend, something which many forgets during bull run.
For orient, keep a tab on the steel production data, till the time the steel production is increasing, orient will have good time. If q4 results are not good, i would suggest to reduce the stake to 15%
I have completely changed my portfolio, because I understood my mistake. I understood clearly that I am a novice and i am very happy to be part of this experts forum. My new portfolio…
Auto sector- minda industries, motherson sumi
Textile - nitin spinners
Construction - l & t, kec international
Cement - ultra tech
Rubber (tyres) - balkrishna industries
Fmcg - HUL
Steel ( steel related) - ifgl refractories
Miscellaneous - avanti feeds.
Total 10 companies, equal share in my portfolio.
All these sectors will zoom in the coming 3 years because Govt policy (gst etc…) is favourable. All these companies got confirmation from investors’ world because they were raising always since 1 yr, even when the market was struggling. All are either sector leaders or fast growing companies in their respective sectors.
Now i am feeling “my money is in safe hands”.
I invite some constructive discussion on these companies…
I understood that only the sectors which have govt policy favourability will zoom. Choose only sector leaders in narrow sectors, not even no.2 or no.3… we have the option to choose fast growing company in the broad sector.
Even an average company will zoom if it has govt policy favourability. An excellent company will move like tortoise, if it belongs to unfavoured sector.
You will not be correct if anyone agrees with you. You will not be wrong if anyone disagrees with you. You will not be correct if the prices move in the direction you like. You will not be wrong if they do not move in the direction you like.
You will only be correct if the growth, profits and continued good management of the companies you invest in move in the direction you like.
