I have very diff approach, which mostly influenced by Mohnish and Charlie.I see number of shares you hold are too much. No of stocks looks overrated Vs Accumulation of stocks. Even with discount broker its too much charges. As Munger said, Why should I put my money on my 27th idea If I have conviction on my top 1.
No offense but Focused MF will be a good for you
Although directed to Abhilasha, by reading this statement some thoughts triggered so mentioning. -
Sir Mr. Munger, the reason for putting money in 27th idea and also not putting in mutual fund -
- I agree with you that I do have high conviction in no. 1 and hence it is my no. 1, but as a matter of fact, I do not own that company. I do not call the shots. I do not know the owners and leadership personally and neither do they report to me. Hence, I cannot put everything there inspite of having top conviction.
- Why the 27th pick then - As I don’t own any company, I have liberty to own many good ones where I have strong conviction but different business carry dfferent risk profile. It is because of the risk profile, this company is my 27th allocation as my money is limited. I don’t take others money to invest hence it is very limited.
- Why no Mutual Fund - I am doing direct equity means I am highly interested in direct equity. I do not come from AMC background and neither have I written any books or followed by anyone, but I aspire to learn this art and am doing hard work for that. I have confidence in my skills and learnings and there is no complete learning without practical approach. Mutual fund may give me similar returns but they cannot give me the learnings I need for the next leg of the journey.
Thanks for your concern & Best regards,
Small Retail Investor on path of practical learning
The above feedback was only pointing towards either having 15-20 stocks porfolio max for retail investor and focus more on accumulating more quantity. Do whatever diversification you want to do within that.Thats It !!!
I agree with you, 15-20 stocks are better as tracking is relatively easier. Therefore, I initially mentioned what is the individual allocation to each stock in this thread. If top 15-20 stocks hold 90% of portfolio value, then it doesn’t matter much to have another 20 having 10% allocation as a basket for learning.
btw Lynch Sir owned 100 plus stocks and munger sir asking to allocate as much possible to numero uno…
My learning has been, there is no clear answer to this and each investor has to understand oneself. If one understands exactly why one has invested a particular percentage to particular stock, the number of stocks do not matter much…
Also, sometimes there are sectors wherein you have to follow basket approach, maybe like Pharma & midcap IT today…that increases your number of stocks but you can look at them as one entity for returns tracking purpose as well even though I agree need to track each individual company as well…
Hi Ganesh, Thank you for your inputs. I would just like end the concentration vs diversification debate by saying there is no one way to earn money in the market. There are no rules here. One can find an exception to every rule written by the gurus.
I don’t understand how my broker charges will be high if the number of stocks are high. The broker charges for delivery is 0 and the other transaction charges as based on % basis, doesn’t matter if you buy 10000 share of 1 company and 1000 share each of 10 company’s. Your statement may have been true in the share market of 1950s but not now.
I am lucky to be building a multi-generational portfolio for my progeny at a time in India when there are so many opportunities available in quality enterprises in growing industries.
Maybe I am suffering from FOMO. What I do know is that my 40th idea will also make more money than I or my progeny will need.
As for focused MF, lets check back in 20 years who is where.
Dang! That’s one hell of the thread created in 2-4 hours. Interesting.
Well - Too many assets diversification is what I understood from the entire thread, which I’m personally not comfortable with, but again as long as you are confident it is good.
Time horizon is quite long for core portfolio and the stock selection I believe are very good.
One approach that resonates with me is the BFSI sector concentration, which I too have, and as much as it is dangerous but stock selection is the key in such situations, if one own strong balance sheets, the turnaround can generate great returns.
My one of the investment thesis is to bet in the sideways and downturn sector for reason my time horizon is very long. I Focus on concentration and asset allocation is something I have learnt the hard way. My current bets are in auto , finance and telecom and I’m okay to wait, although focusing on asset allocation.
Good luck with the portfolio. Happy to discuss more.
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