Creating a proper portfolio

I’m in my mid 20’s and I’ve been in the market for around 2 years(trading mostly) and I have few stocks in my portfolio. I want to become a serious investor and create a portfolio which caters to both my investing and trading styles. But I’m not sure of the approach I’ve to take to build one, whether to diversify first or hold and concentrate on one stock and then move on to next stock. I have made use of this lockdown well and have read books/articles but the lack of experience has made me question myself. Any Inputs on how to build one portfolio, strategies etc are very much welcome

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A year back I was at the same place as you are since then I have learned so much so that’s my input:

  1. Start with concentrating your portfolio don’t buy many stocks just buy two or three or one whatever you meant with a concentrated portfolio and have like 30% in cash.
  2. To come up with this stock you will research some and then you will bet on it, but after buying this stock you will come up with better companies. Now you can reallocate your stock portfolio plus you can also buy with reserve cash, depend on your conviction.
  3. The reason was to start with a concentrated portfolio you will able to start plus if you are going to buy another company by selling those you have to ask yourself is this better than that. Always remember before selling any stock just recall why even you bought this. There must be a solid reason for selling any stock. So you can acquire skills rather than doing useless trading.
  4. I noticed you mentioned that you also want to do trading while investing, my advice DONT. The reason for that is after sometime your mind will forgot what you were doing and you will end up selling and buying stocks. Just concentrate on one thing so you can give more time for finding new better companies.
  5. Be in a game, stop worrying if this happens if that would happen. my friend things will happen but you have to start. If you are not investing in penny stocks you will do fine so don’t worry.

Thanks for the inputs, will definitely start with it.

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There are number of PF threads from members in the forum with different styles of investing, maybe you can find one relatable, you can build your own style on that. And your style will keep changing for better with time as you learn, experience new things. There is a lot to learn as market is not static but dynamic and it changes and teaches you a lot of things, so consider every step both good and bad as part of education. Focus on learning, creating a process.

You can look at the same thing from 2 different prespectives, and not necessarily get confused if you can. Maybe you already have the ability or you can develop this skill. Looking at a stock as an investment and as a trading bet, but you have to differentiate between your thinking. The approaches and timeframes should be different, you should be disciplined, the stop-loss has to honored etc.

There is a lot of gold right here in the forum, and you don’t have to dig it as it is readily available.

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The below post may help u in starting and understanding businesses:

Start reading books with One upon Wall Street by Peter Lynch and The Thoughtful Investor By Basant Maheswari.

Just Google Value Picker u will get loads of info, spend time reading, digesting the info and understanding. Slowly evolve a style of investing suitable to u and built portfolio.

Best part is u r starting early so u can afford to do as many mistakes as possible and learn.

All the best.

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I generally follow multilayer portfolio where I have Core portfolio having not more than 5 Companies and capital allocation of 6% each. These are compounder , Monopolies or Very high moat companies like 1 Asian Paints. Investment time horizon probably never to sell these stocks. Then I have Satellite portfolio where I have around 15 companies with 4% allocation each. These are the companies which I see or try to see at least, growth in coming 2-3 years . Mostly sectoral tailwinds companies or high growth companies or short term theme plays like few chemical stock or Sanityware stocks. Eg: Alkyl Amines or Acrysil … and lastly 5 trading stocks of 2% allocation to trade short term. Duration 1 month to 6 month depending on target and charts. In this way, You would probably be able to check your Investment style.
Also, stocks from Satellite can be promoted to Core in case you see story playing very well even after 2-3 years.