I have been investing into Equity(Stocks and MF) , Debt and other instruments from last 2 years. I have realized that investing in stocks is not a child play and is mostly driven by broker what you buy and sell. Also, if you compare to MF, where you invest and forget about it, invest directly becomes tough.
Lately, i have been spending atleast an hour on daily basis to understand the science behind investing rather than reading what my broker gives me in the rosy pdf, which has it has its own downside (ofcouse time). This is where i stumbled upon this forum and realized how this community is helping novice as well as professional to share their views.
I have been accumulating stocks from some time now and having hard time let go these stocks, due to which i have got 45+ stocks in my portfolio. I sold lot of them and booked profits which gave 14% average returns which i feel is good.
I started using screener and this forum to sell/bookk profits for some of equities i had, still there is huge chunk which left and i am not able to make a wise decisions. Could you guys please throw your suggestions about the Hold, Sell, Replace for below stocks.
Thanks a lot in advance.
The answer lies in your question. Why not just stick to MFs where you can just invest and forget. I keep telling this - for wealth generation, you first need capital so most individual investors would be better off utilizing all their efforts into capital generation. Capital allocation part can be outsourced to a fund manager. Trust me - you will do well in life.
My 2 cents. Prune your portfolio to around 10 stocks. Easiest way by looking at your list is to sell any stock with less than 2% allocation as even if these stocks double in value you will not generate a significant return. Concentrate (10 stocks or less) and diversify ( in different sectors) which will provide some protection from downside and be easier to manage.
Thanks Sandeep, i definetly echo your thoughts and its not a secret, thats why i maintain a ratio of 1:1 with MF and equity. Challenge is the human nature of trying out things on it own and learning. Thats the only driving factor for me to invest directly.
In a long term, i would like to see holding only 15 stocks which i can monitor on weekly or monthly basis, instead of spending time contemplating stocks on daily basis, this is where i need help to identify stocks i can hold for long term.
Thanks Susindar, this sounds like good idea, however i would be taking blindolfded calls in letting go some equity which could have some potentials. This is where i am banking on the experts to make non biased calls based on the stock and the vales they contain. Do you have some suggestions which all i could prune.
On the same note, i was thinking about the next market falls and if that happens, biggest looser would be the one having debts on their book, so probably they could be pruned first.
I am also relatively new to the investing with about 3 years of experience. I have never touched MF.
How i do the stock picking is simple, i dont complicate stuffs and I dont care how many stocks are in my portfolio.
I buy stocks, which convinces me to hold it for atleast 2 years. in doing so, i also partially book profits in regular interval and also book loss if the quarterly performances are too bad to be in the portfolio…
As per me, sell the stocks of the companies that you feel produces products that will not be required in 3,5,10 years times. E.g byke, sanghvi etc.
Then I would sell all those companies that produces products is don’t use, care, understand.
E.g chemicals, pharma etc.
Then I would try to do a discounted cash flow calculation and sell all those companies which do not have a decent margin of safety, any company that has priced in more than 35% growth would be a sell.
In your portfolio,three stocks which i wont sell at this point of time are Dewan housing,Dilip buildcon and Piramal.All three have solid growth potential
I have been through the same situation as you with about 50+ stocks in my portfolio.
as newbie i was always afraid to make a large bet and hence started with as small at 1-3% of my portfolio value towards each stock.
- Diversification helps a lot in avoiding risks, but the flip side is the earning potential takes a hit. So even if a stock doubles, the earnings looked superb in percentage terms but in rupee terms it was not a significant amount. But i was ok with this for last 2-3 since i realised that investing large amount without the conviction would be useless.
- a large list of stocks also poses problems for tracking…
I think firstly, you should reduce the no. of stocks to around 15-20 which i personally feel are managble. This translates to 5 - 7% in each stock if the capital is distributed equally. I feel this also takes care of downside risk.
What i wouldnt sell are : DHFL, Lupin (add more in the latest dip), Piramal, IndusInd Bank, Tata Motors, Yes Bank. I donot track others.
You know the challenge here is we are just touching on the surface and by looking at some financial numbers making those decisions. Now, to identify if a company is really doing good and there is no way other than going thru the details of the company on regular intervals and having 50+ stocks you can never do that.
My second problem was booking profits, so far i had hard time selling stocks bcoz of the greed “what if increases more”. I understand if you follow a strict target from time of investing then it makes thing once the targets are achieved.
Thanks Alphin for your response. Overall, i liked you idea of pruning which is based on longevity, necessity and then financials.
Challenge is for most of the stock, i have some brilliant idea(at least i think) would be a game changer and not really able to weigh in those decisions. Sanghvi is definitely which can be pruned, i was just playing contra in (Sanghvi and Deep) and as soon as it hits 200, i will be able to sell Sanghvi.
To your second point, i do care about Pharma, unfortunately, US doesn’t care about India pharma anymore, otherwise this was the most defensive sector to bet on.
On your last point, i definitely agree with you and what i need to next is some Math to identify this. Is there any custom portal which i can use to get the MoS. I have been using PEG as one good factor to identify how much growth has priced in. Can you confirm if i am thinking in the right line.
Thanks Paraa, all these three stocks are showing consistent growth from last 3-5 years, so point noted sir.
How about Deep industries, Aurobindo, Granules, KEI, Talwalkars, yes Bank. These have shown strong growth as well from so many years, Can you give me your view on these stocks and why you feel that way.
Thanks Harsh, i guess this is every thoughtful investor first mistake. He/she would take diversification really seriously and overdo that to minimize the risk, as he is new to the market and you summarized the problem in those two points.
Looking at your recommendations, they are mostly Large Caps, do you track Small cap as well? Also, if there is any recommendation on any particular stock to prune which you feel convinced.
i have a sort of different principles. I buy stocks, which i am confident to buy their products if i needed them. for example, Godrej consumer products, hatsun agro etc. for the industry , which i dont have a clue but still i prefer to enter these market to balance my portfolio. in this case, i look up to investors like Rakesh, Porinju, Dolly, pabrai and mudar. i dont buy on their recommendation, but buy the stocks they have personaly invested in it. i have been reasonably happy and sucessful in this. for everyone certain style of investing makes sense. and this is style makes sense for me.
Out of these i only track Yes bank and Deep Industries.
Yes bank’s well documented NPA problem keeps me away from entering it.It’s a contrarian bet where good gains could be made if they manage the situation .Also your position is less to make any significant impact on the portfolio and i would hold it.
Deep industries unless their issues with ONGC are settled and ONGC starts giving them contracts,the situation is uncertain.
Got it, Whats confusiing for me with Deep is that they published the Certificate from ONGC stating the best vendor or something and we can only know when we get the numbers. Results are coming on 14th i guess for Deep.
Best thing to do is go to YouTube and watch a multitude of videos on valuation, DCF and time value of money.
You will get enough knowledge to calculate the real value of a stock.
Thank you folks. Reading your views, definetly helped me to come up with Sell strategy and i was able to let go few stocks from my portflio and would continue trimming.