Portfolio creation in 2019 -Bear (bleeding ) Market

If you don’t want to gain returns more than 15%, then why not go with more probability like Structured Notes from brokers which are mainly Market linked Debentures with capital protection and can give you CAGR of 13% to 17%. Checkout these products from brokerages like Edelweiss, AnandRathi.

I think whatever you do it is time consuming and risk is high instead if expectation is moderate then go with more on debt side.

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You need to look at risk vs return. At 15% return expectations in equity, risk may be less than using a debenture.

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Bit old article 2017 but still relevant .ICICI is king in this… Though many other PVT banks (even some PSU) they will NOT allow you to open FD/PPF , in this case issuing insurance was really fantastic.

I said your capital is protected in Structured Notes.

Structured products come with fees, premium and time limits and appreciation caps. So it’s like buying a put or call option which has a time limit. If it is backed by equity, you still have the same risk but you pay a premium to set a bottom.
Again there is no fee lunch. It does not become less risky.

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Yes they are generally linked to Nifty Index. but they have protection if the Nifty falls to certain limit like protected till 30% fall.

Yes setup fees is chargeable but it can be waived off if you negotiate but the probability of making returns let say 50% in 3 years is with 3-4% standard deviation. These number vary from product to product however the probability of making 13%-15% CAGR is >85%

what about the tax implication?

After 3 yrs it will be calculated as LTCG if structured product is based on debt than 20% and if based on equity then 10%.

For those who have incurred losses can offset their long term capital losses with these gains.

very good selection of stocks

cud u give few lines about each of them giving your rationale ?

This is made possible by using insurance which will cost premium. If the risk is high, premium goes up. If someone feels puts and calls are safe, they are misguided. Yes, you don’t lose capital when market goes down or against your bet but the premium is not guaranteed to be returned. So the risk is higher in real terms for any hedge which includes Options market, structured products, etc.

If we believed that puts and calls are safer than equity, we would all be investing through it. However time value of money and the premium destroys us slowly in the long term. Structured products use the same concept and will destroy us slowly. The good news is that these structured products are not easily available to a small investor and hence saves most of us.

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Thank you for introducing to new topic: structured notes a.k.a nifty-linked debentures
+ve: capital protection, assured coupon rate + nifty performance returns
-ve: minimum investment of 25Lakh, lock in period of 3+ years, not sure about amc charges

Thanks for introducing these . Was not aware of the same. As far as 15% return expectations is concerned, point is not to be greedy. Any upside is always welcome.

Difficult to cover rational in single sentence for any of them. Fundamental reasons have been-past record, long runway ahead, management pedigree,valuations in current scenario.

I tend to agree with you. When the aim of earning returns needs to be balanced with capital preservation, need to be satisfied with normal returns (higher than FD) . I have a strong feeling that chances of upside are very high in my above mentioned portfolio and at the same time there’s a margin of safety too.

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Add Bharat Rasayan, Vinati Organics, HDFC group companies in portfolio

All too costly at CMP.May not give decent returns in coming years.

Dropped ICICI securities and Bajaj Consumer, adding Tube Investments.

I totally agree with you. I have been investing since the past 17 years following the same approach. I have currently invested in 100-130 companies. Yet am able to generate 25-40% compounded return.

Indian companies run poor corporate governance which has been clearly evident from the past and more so in the last 1 year and hence 99% of them are not worthy of higher allocation. Even if 2-3 fails from the top 6-8 allocations, it takes a lot of superior return from the rest of the investments to gain decent return or to safe the portfolio from bleeding.

I personally avoid allocating more than 3% in any stocks and at very rare occasion invest around 10% in a stock, lately paid reminder tutions fees for Tata Motors (avg price at 300) and Reliance Capital @417, 18 months back none of them gave any indications as to they will reach current level but such is market. :slight_smile:

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let us say ur 3% allocation (Aarti Ind kind of stock) becomes 10bagger… and becomes 15% of ur PF market value. what do you do? rebalancing or let it run with full qty?

I prefer booking partial profit at regular interval, sometimes selling 25-30% of investment at 100% return or at times booking 25-30% profit at 200-300% return depending on the story i believe in and the investment done in that particular company.

No one in the world including the promoters can know if the company will go on to be multi-bagger with regulations and technology changing year by year, its all in hindsight.

Hence at such times, its always better to book some profit and save the initial capital atleast.

Ex - I invested in Dewan housing around 200…went onto +600 levels, had booked 60% profit at 550 level and now its 50.

Prakash Industries at 32 level, went on to 200-250 level, had booked profit at 225 for 50% and now quoting arnd 50 level.

For both the stocks had never thought it will fall back so down, but such is market and such are indian promoters. :slight_smile:

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