A few pieces of advice that I received during my investment journey, Buy and Hold strategy looked intriguing to me. It looks simple the way experts convey this mantra. But from my few years of investment experience I can tell you that it’s the most difficult way to make money from the market (specially from direct equities). It’s more about playing with mental strength as opposed to quant/data based investment as one can do for short term trading. I think average investors like me are better off handing over most of the surplus money to experts (mutual funds) or investing it in plain vanilla index funds.
Nevertheless I took the challenge unknowingly (as a novice investor I was not aware about how hard it would be to make money from direct equities) and tried to find so-called nirvana stocks that can be bought and held for long term and eventually grow the corpus without much trouble. I started investing 70% of surplus money in good mutual funds using SIP. Remaining 30% was dedicated to direct equities to face the challenge. And there I used to experiment with different strategies to find out good stocks available at a cheap price. Tried all sorts of strategies like low PE/Contrarians/PSU investments/Cyclical/Acting on tips obtained from media etc… but alas nothing worked. Somehow I was finding ways to lose money in the market while investing in direct equities:) Barring a couple of investments, I had to sell most of them at a deep loss even after holding them for a couple of years. Odds seem to be pretty low for average Joe like me to find winners from this pool of stocks.
Then the only option left for me was to invest in high PE stocks to make money from direct equities. So before throwing in the towel, forgetting all the gurus mantra (for some reasons gurus are against investing in high PE stocks), I started investing in high PE stocks like Asian Paints/Pidilite of the world and boy it did the wonder/trick to my portfolio. My luck finally favored me. In the Indian market, the buy and hold strategy seems to be working only with so-called high PE stocks. That’s quite revealing and counter intuitive. These companies somehow are able to compound revenue/profit consistently in each and every year defying competitions.
Again lucky to face a flash bear market during/post pandemic. Saw portfolio gain evaporate and lose 50% of portfolio value (both in US and India market) in a matter of a couple of weeks. I guess, this is the most mentally challenging thing that regular investors like me are scared to face:) Somehow was able to keep sanity and held on to these winners. It gives confidence to weather the next bear cycle.
As I stated in my first post, I wanted to build a portfolio which can appreciate in the long term, grow and pay a dividend, if possible beat the market as well. This portfolio is beating the respective benchmark by a wide margin, most of these companies grow and pay dividends regularly. But the only problem is that yield is not enough to live off dividend. But anyway I have time on my side and wait for it to happen some day:)
Here is my portfolio (principal amount is equally distributed within each stock). Except for a couple of stocks most of them were bought during 2018-19 time. I am not planning to sell these stocks any time soon. These stocks performed well even before the pandemic. Pandemic seems to have given more tailwinds and hence more gains. I would like to keep my portfolio simple and continue to maintain this winning streak. I only plan to sell these companies if revenue/profit growth consistently falls below 15%. Luckily I got my first 10 baggers in Vaibhav Global and Deepak Nitrite (not any more though).
Not sure how long this dream run will continue. My only worry is that if these companies stop growing then I need to again find out different strategies (already tried all options, only it seems to be working for long term buy and hold investment) to remain in the market. Anyways I am enjoying it while it lasts:)
Let me know if one can find any red flags and the portfolio can be optimized further.
Stocks Buy Price Gain
Ashiana Housing Ltd. 115.19 67.29% → Cyclical affordable housing play , will sell as soon as interest rates are hiked in India
Asian Paints 2206 42.29% —> Compounder
Bajaj Finance 3840 98.77% —> Compounder
Bajaj Finserv 9583 90% —> Compounder
CarTrade Tech 1489 -23% —> Recent bet on new digital tech
Deepak Nitrite 334 609% —> Compounder
Delta Corp 206.75 39% → Post pandemic bet, bought before pandemic and held on to it
Dr Lal Pathlab 2337.5 56.46% → Compounder
Granules India 85.90 272% → Compounder
Havells India 712 86% → Compounder
Hdfc Life 651.66 8.23% —> Compounder
Jubilant Food 1945.66 101% —> Compounder, love Dominos pizza
Kajaria Ceramics 586 109.26% —> Compounder
Lux Industries 1500 164.80% —> Compounder
Man Infra 35 302% —> Bought it to diversify portfolio and for its high div yield, dont know what to do with it now, will sell soon:)
Mold-Tek Pack 259.26 177.73% —> Compounder + Div Growth
PI Industries 653 325% —> Compounder
Pidilite 328 625% —> Compounder, bought it sometime in 2015 as soon as I came to know that Pidilite makes Fevicol:)
Polycab 999.87 145.73% —> Compounder
Relaxo Footwear 747 87.25% —> Compounder
TCS 1051.34 233% —> Compounder
Vaibhav Global 81.79 597% —> This is the only contrarian bet that worked for me, bought it when I was experimenting with contrarian strategy and that time (sometime in 2015) this company was going through rough patch due to some missing tech/payment features, I thought it should be easy to fix and hence bought and held on to it
It may be elusive but hey after all it’s a dream worth to chase:)