Thank you all for making ‘Value picker forum’ an open, vibrant & trust worthy place for fellow investors.
I am writing this post to make this as ‘Talking walls’ of my investment journey now and for future. The Aim is to have this forum as an investment diary and learn from you all with your comments and inputs. Also, will try to add value to the forum wherever possible.
About myself and brief history
I am an Electrical Engineer working as Sr. Technical Officer in a 'Scientific Research Institute’ of Repute. I tried wetting my feet in stock market for a brief period in 2007-08 without knowing the depth, currents and waves of direct equity investing. Being in middle class, redeemed investments in red to fulfill family responsibilities like home and other basic amenities. Restarted my equity investment journey in 2020, this time with lot of preparations to sail for rest of life journey. Please don’t think am old, I am 35 with a working spouse and children as I write this.
My Investment Theme: We (Couple) are long term investors (With at-least 5-10 years Time horizon). Our Aim is to accrue long term wealth by investing in high quality Businesses with visible high growth trajectories; in sectors with strong future prospects. We strongly believe that India’s high growth story (GDP growth of 8-10%) to continue at-least over next 3 decades; because of favorable demographics and structural changes and reforms in progress. We have our 1) Retirement corpus planned with the help of NPS (Govt Bonds + equity) with Moderate to No risk. 2) Also have Real estate as core Asset cum investment with minimum downside risk; though low potential appreciation at present market condition 3) We are here to invest in Businesses for best capital appreciation possible over long periods of time, where compound interest works in favor of our financial plans like Short-close some borrowings, Children’s education, second home, foreign Tour, second car, business etc.
My investment approach:
- I would call my approach as Growth at reasonable price as of now. In this method, I can visualize future prospects to hold on to businesses. Value bets are not giving much to hold on for me as of now.
- I would like to maintain concentrated portfolio for ease of tracking (10 - 15 businesses) and for higher returns. I believe only concentrated portfolio can give higher returns.
- I am ready to wait through few quarters of under performance, if prospects remain unhindered.
More details are provided in ‘My Business Investment Plan & Learnings till date’
My present portfolio with investment rationale is given below, seeking advice of learned & experienced investors here.
My Business Investment Plan & Learnings till date:
Entry and Asset allocation:
- We are investors in Growth companies with common sense approach, so keep looking for Quality business opportunities with MOAT in trending sectors with huge runway for growth and reinvestment.
- Once you have new idea (Business), check its credentials with ‘Buy’ check list to assess its suitability.
- If ‘Buy’ check list gives marks above 70, then buy tracking quantity. say 10% of intended position size and increase it in shortest time possible as it goes up.
- We will have 10 to 15 diversified business positions at any given moment of investment journey for ease of tracking the businesses.
- Our ideal position size would be 3 -15% of Portfolio size. (i.e for 15 Lakh portfolio position size shall be between 1 to 1.5 Lakhs)
- Size positions based on maturity of business model and upside possible. Higher the maturity and upside possible higher the allocation.
Review & Re-balancing
- Review of businesses will be done once in a quarter with the help of Quarterly results, Earnings calls / Transcripts and Institutional research reports wherever available.
- If there is consistent and improved performance in line with expectations then Hold positions, if there are positive learnings-increase if possible.
- If there is moderation of performance because of market conditions hold. If the performance moderates for long time and industry/company structure/prospects not in line with the theme of ‘Buy’, then reduce/exit.
- Study businesses in portfolio as much as possible, building convictions in your multibaggers can only make portfolio better over time.
- Check your fast growers and slow compounds for re-balancing quarterly / Half yearly. Add to High conviction fast growers and reduce from low conviction draggers
- Manage liquidity risk through lower position sizes, i.e book lower position stocks with low conviction first for liquidity.
- When new facts require us to change our mind and we are wrong.
- Track Capital allocation decisions of surplus cash flow of company, is it in Healthy zone for business
Profit & Loss booking
- Book profits / Loss always in Low conviction businesses first.
- Book Profit when needed in businesses whose runway for growth and reinvestment is not clear and not visible.
- Book Partial profit in businesses (Not in Core long term portfolio) when monthly RSI (14) is above 77.
- When new facts require us to change our mind and we are wrong.
- When we believe there is euphoria (Intense excitement) in valuations, Exit/trim during euphoria – price at least 30% above our estimate of fair value.
- Ability to re-allocate capital to a significantly better opportunity
- Avoid getting tempted by momentum and positional tips by friends & others for short term gains. (Once in a while for joy of trading can be done with high conviction bets only)
- Avoid buying Cyclical s (Metals, commodities…etc) if buying then do ensure it is in UP cycle and Business PE is in high double digits because of suppressed past earnings and ‘Sell’ when PEs are in low single digits with prolonged higher earnings.`
Purpose of this thread
- Investment is a journey, seeking your directions to follow the right path to reach planned goals.
- Keeping my decisions / learnings within myself, causing ambiguity; need affirmations by way quality discussions about portfolio construction strategy as well as individual businesses to grow as better fellow investor, who can contribute back.
- I Will definitely try to add value to the forum in every possibility, hope I will be ready for that role soon.
Few hiccups am facing presently, which I am trying to improve.
- Trying to learn how to build good position in my winners as quickly as possible.
- Usually wait for considerable time and miss better entries in new & existing ideas.
- Booking profits and losses, it is based on feelings seeing the data or chart. Trying to fine tune the process to make it more data driven & systematic.
Thanks for your time.
Hope to have great investment journey ahead in the forum.
Special thank you:
I would like to use this opportunity to thank the following:
Thank you @Donald for giving such a vibrant forum and ideas on portfolio strategies.
Thank you @hitesh2710 for being such a humble & responsive leader; who is available when fellow investors needs him.
Thank you @desaidhwanil for starting in a way any average investor would start and growing to be a collaborator and showing us the path.
Thank you @Worldlywiseinvestors, @sahil_vi , @Tar, @Rafi_Syed for adding so much value to the forum. Even though you are my contemporaries, you guys are well ahead in learning curve of investing compared to average investor like me, am learning from you guys. Thank you.