Investment journey of a late starter

Correcting a typo, started with 6X , reached 120X in 2017 end, took out 40X, remaining came down to 10X in 2020, reached a peak in March 2022 of 150X , current is 130 X. March was a different month as my 50% portfolio is in INOX Leisure, Shoppers stop, AB Fashion, Tata motors and Jubilant Ingrevia.

I am investing average 6X to my existing holdings per annum in last 2 years.

Current holdings

  1. Tata Motors
  2. AB Fashion
  3. AB Capital
  4. INOX Leisure
  5. Jubilant Ingrevia
  6. Thomas cook
  7. Globus Spirit
  8. Gulshan Poly
  9. AGI Green pack
  10. Shoppers stop
    11 Arvind Fashion
    12 Hindware Home appliances

Stocks booked

  1. Apollo Tyre 3X gains
  2. Phillip carbon 3X gain
  3. KPR Mills 4.5 X gains
  4. Rushil Decor 5X gains
  5. Varroc Eng 4X gains
    6 Hindware home booked 7X sold at 460, reentered with long term horizon at 310.

Stocks in watch

  1. LTTS ( might become large cap IT)
  2. KPIT ( good buy below 400)
  3. CSB Bank ( cheapest bank)
  4. Jubilant Pharmova ( cheap, good API, CDMO and radiology business)
  5. Arvind mills ( largest denim producer, turnaround case)

Drawdown, booked 8X losses due to leverage positions in June month severe fall,

Future expectation to double PF in next 12 months, looking for concentrated bets as lot of optimism is taken out and downward risks are limited

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About Portfolio construction and allocation
Now, I am still very liquid about this .Until now what I have been doing is …
I buy stocks after research via VP, screener, Trendlyne , Company website, Recent concalls, AR etc. I usually do not buy high debt stocks or very high PE stocks. But I do not have any fixed PE in mind after which I won’t buy . I had adani enterprise until a few months ago which doubled my money.Sometimes I buy with x% in mind if there is a some capex or operating leverage coming into play in a few months .
In general ,I try to not buy anything even for trading ,which I would not be ready to keep for a year or so. I do not try to buy hot fads . I can’t do momentum trading as I do not know technicals well enough .
Whatever profit I make with these trades ,I buy long term stocks with it .That way ,I get to satisfy my itch of stockpicking and profitbooking and still build my core portfolio.
Allocation is my weak point still. I am not even sure how people allocate 5% or10% of portfolio to a stock. Do they calculate it with present portfolio value or the starting portfolio value ?
Since I have 25 plus stocks, not many outside the core stocks has more than 5% allocation based on present portfolio value.
Circle of Incompetence
I do not buy stocks from certain sectors…
1.Banks and NBFC … I do not understand this industry . Too complex for me .
2. Capital goods and heavy Engineering : Too slow and asset heavy . I know a few good companies but will not be able to hold unless I buy them dirt cheap like 2020 prices.
3. New age BS like paytm, źomato and the likes which do not know how to make profit. I do not care what Goldman Sachs or JPMC says about them.
4. Insurance … do not know how to value them .The EV thing is not reliable as evidenced by LIC.
5. Metal stocks… unless I learn to interpret LME stocks & charts properly, its not possible to play metal shares correctly. My level of impatience won’t allow me to buy at extreme lows and wait 5 years for the metal cycle to return .

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Next I would like to write down my current ideas on a few items. The idea is to come back few years later and see how wrong I was …
EV adoption as an investment idea: IMHO, India lacks sufficient infra now and will take years to successfully implement it, in order to allow the common man to discard the ICE cars and take up EV. Even with battery swapping ,considering the congested roads and fuel stations, I do not really see easy adoption. Even from clean energy perspective, running EV is useless if the power generation is through traditional sources . No doubt it will happen sometime but the timeline may be much longer than the current euphoria or political posture suggests .
It is even more difficult to know which companies would really benefit for EV adoption .
As a sector for investments, I would better skip it . Because for any upcoming industry, there are lots of competitors and a very large percent of them dies out before the industry matures . How would I identify which one would win out of hundreds ? While picking the right one can make me a crorepati, picking the wrong ones would only result in loss of time and money . Its much better to focus on industries where consolidation is going to happen or surviving biggies are going to get bigger(As did Astral) . There it would be a much smaller field of choice and consequently higher chance of getting it right .
Currently a few companies are getting eyepopping valuations for this apparent visibility of future revenues but if one takes a look at the 2 wheeler battery saga and Ola etc. , he should be cautious .
In short… Lynch’s advise stands … Tech disrupts itself and its very difficult to get early mover advantage when its already a fad .
Green Hydrogen: This one is even greater fad . Luckily there is no green hydrogen stock in India (reliance excluded) but there are lots of hurdles to cross and its widespread adoption is even further away than EV . This link outlines some challenges and they are pretty substantial…
Green Hydrogen: Challenges for Commercialization - IEEE Smart Grid
The reason why these new fangled techs generate so much hype in stock market is pretty easy to guess — Very few people are from science background and its very easy to fool most people from other backgrounds by giving overambitious statements and bucketful of jargons . Example …
Urja Global: The Strange Case Of A Non-Existent Element And A Market Scam (cnbctv18.com)

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This post is about my dilemma about holding stocks for long term vs selling on a high when there are no further near term triggers . Having read a lot about benefits of long term holding, it is bemusing to see self proclaimed long-term investors cum evangelists selling out fearing near-term headwinds\margin pressure\Macros etc. etc. and justifying their prudence by pointing out to the high PE etc. when they sold. It appears to me , the very quick turning of bear to bull and back to bear market and better access to information has caused many newish long term investors to become confident about getting higher returns by finding new multi baggers regularly and in perpetuity. The old wisdom of the market does not agree with them .
I myself have a happy trigger finger and have tried selling high and buying low trades with my long term bets but they have not really worked out. Either I sell when it has already dropped or I get back onboard before it has dropped enough. This creates lots of FOMO & tension and I think , for me at least, its better to stay put and learn to live with the drawdowns. For sure how nice it would have been to sell IEX at 320 or BR at 830 and by them back now…
It seems to me , to do that one would need to be fairly knowledgeable in technical and trust it too. In my case, while I know some technical, I have not found the confidence to trade based on them, The paper trades seems to fail whenever there is some surprise in the air …like war or fed interest rate hike etc. While there is sound logic behind a caup and handle or a pennant pattern or support\resistance , none of them can stand their ground when Mr. Market gets manic or depressive,
It seems much easier to trust the companies that I have bet on for long term after research and building conviction, to ride the waves and sail forward .Some in person experience of power of compounding helps as well …
One of my close relatives had bought some GAEL when it was named something else at face value about 28 years ago. Agreed it has not become a 100 bagger but 40X in 30 years is not bad considering until 2020 it was a fairly obscure stock and a faltering business all along.
These relatives had very little access to info back then so I hope to have better outcomes with so much information at hand . Of course, nowadays nothing is available at face value and so I have to be extra cautious as well.

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Agree with you. In my case, I would like to give example of Abott India. I purchased it around price 20,000. And then it went down by almost 25% to 15500. It was my first bet in pharma after doing the analysis and reading AR. Also i heard some negative news about competitor coming out with a low cost product as well as some drugs coming under govt controlled pricing. I thought that it will go below 10,000. But I didnt take any action and stayed put. Now its around 19500. Sometimes ( or many times ) not taking any action also is advantageous.

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I highly agree with you on this but there is always opportunity cost gap left out for most of us.
I have personally tried different times making qucik exits and entry on basis of tailwinds but finally realised making no move is good for personal health and helps in avoiding extra stress.
Guys who are regular and are on toes maybe it can be helpful for them

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@Shikhar_Seth “Opportunity Cost” is applicable only when you see opportunities lying around.But if you are a value/cautious/long term investor ,you are unlikely to see too many opportunities ,unless in a deep bear market . Traders on the other hand see opportunity whenever a stock throws up a sought after pattern.
Suppose in this bear market, your present holding stock A faces margin pressure .You sell it and buy stock B which has upcoming capex fruits and operating leverage . Now bear market stays on for the whole time stock B shows better results and goes away just when company B starts going flat and company A turns around. Can anybody say whether selling A ,buying B was good decision or not ,except in hindsight ?? Here the switching cost can be more than the perceived opportunity cost.

I agree with you about the stress angle. Morgan Housels book explores that idea very well and gets it spot on.
@Mudit.Kushalvardhan I have some(IEX,Globus,Chemplast) which has rolled back 45% or more . Only time will tell whether I chose the right stocks or not .:grinning:

so when they are rolled back by 45%, then what are your views on them in general? Many a times, we start finding faults in their business models and justify selling them. And you know the saying goes…When you want to purchase Mercedes, you start seeing all mercedes on the road. Confirmation Bias kicks in. You will start finding the relevant proof of your blunders…Then how you handle this? In your case, its just rolled back, but in case of original capital erosion to that extent, things get more tricky

In case of Globus and IEX ,I am still in Green. But Chemplast is still 30% down from my cost price. I have read last 3 concalls, the company results have been just as I expected when I bought it before its Sept 21 results . I do not see anything wrong with the business itself and the management seems to be candid enough and so I continue to stay put ,till I start to doubt the management or the facts about its business environment changes.I have not been very long in markets but have booked 30% losses in past when those conditions came true.
Example. Valiant organics(Lost trust in promoter),Symphony(2nd Corona wave made things very difficult for the company).

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This post is about the small cap stocks that I have picked in last 6 months after due research expecting good outcome over next 1-2 years . In some of these I have hopes that they will turn out to be a stock worth keeping for long term. Based on my level of conviction these have 2-3% allocation to begin with…

Lux(3%) – Bought at around 17 PE. Fairly old and decent business which I hope will do well with its premiumization efforts .Present headwinds must go away sometime or other and even if its WC heavy business, the BS is strong enough. They have done very well in past few years and I expect them to do well once the Cotton prices come down . I am aware of the Insider trading accusation that brought about the price crash but the amounts involved are too small . At my entry price , I believe I have fair MoS to stick around for a while and wait for the tide to turn.

Sirca Paints(3%) – It seems like a good bet . 10 years track record is decent and the promoters seem efficient enough. While they have most of their sales in the North, the Italian products are available in Kolkata and of premium quality .They have expansion plans and its mostly how they expand their sales & distribution network. I will need to keep an eye on the execution and follow the concalls. The AR had impressed me for such a small company.

Shivalik Bi-metals(2.5%) – Capex ahead. Technological moat and indirect play on BMS & smart meters .Again the promoters have 30+ years experience and the business seems to have turned for better ever since they went into the shunt resistors business .Its not easy for anybody to start competing with them. Bought at around 400 .

HBL Power(2%) – Again a very technical business but they have clear ability to do R&D and produce hi-grade stuff . Problem is they were not very good businessmen before. Since 2014 they have cleaned up their book , letting go of low margin stuff and have strong tailwind because of the TCAS . If they are able to get their Lithium ion battery factory going on time, this can re-rate .Considering their long history of expertise in varied types of batteries , I believe they can pull it off. TCAS and Tin-Lead batteries will provide some extra profit anyway.

Meghmani Organics(2%) – Agrochemical capex in a couple of quarters, Import substitution , good pigments business augmented by the upcoming TiO2 business . While a lot can go wrong as well, at < 10 PE , I have some margin of safety or so I think .I am aware of the dubious deal a few years ago but I believe the management has matured and will not go down that path again.

Satia Industries (1.5%) – The most backward integrated paper business and hence I expect them to achieve better than average margins . Capex is done and sooner or later the operating leverage will come into play. The Zume tie up may or may not prove materially beneficial . If it does, this can become a long term stock else I should still see a couple of years increasing revenue and profits anyway.

AllCargo Logistics(2%) – Very good business that is undervalued because of its complex structure. Demergers are in the horizon and can unlock considerable value (price increase) . At 7.5 PE I believe I have bought it at fair or less than fair price .

Apart form those I have two more where the risks are considerably high because there is no comfort of past steady performance . I picked these because the promoters are old hands at their business and have more skin in the game than most. Whether they can execute or not will make or break the story. These are those stocks where one can lose the capital or get a 10 bagger .

Cineline (1.5%)

Optiemus Infracom (1.5%)

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Does continuous learning mean continuous churning?
Well… looking at a few VP threads and twitter handles I follow avidly , it certainly seems so . Even I am facing this problem. Being exposed to N number of company names via these sources results in researching quite a few of them and while I manage to reject some out of hand, in many cases I like too many companies . Even after doing in depth research and building conviction enough to buy a stock, it has happened so that I have not been able to hold them since I came across some other stock which seemed more hopeful . For example, I had Prince Pipes and Adani ports . I expected them to be good bets for long term and knew that they would not be showing incrementally better results immediately and the story would take years to fructify. I still think so but I have already sold them after holding for about 9 months each.
This would not have happened if I had not been looking out for better opportunities and thought that I had found them .While at the moment I am still confident about these better opportunities, I might again switch if these stay low for 9 months and I find something else .
I am not really sure how to or even whether to stop this continuous churning as PP or AP has not done anything yet to prove me wrong. What is the correct approach in case I do not have incremental capital to deploy ….
A. Buy, Hold and stop looking for other stocks if the bag is full
Or
B. Continue as I have been doing and be more choosy while selling or buying

You are very welcome to provide your opinions on this dilemma …Does continuous learning mean continuous churning?
Well… looking at a few VP threads and twitter handles I follow avidly , it certainly seems so . Even I am facing this problem. Being exposed to N number of company names via these sources results in researching quite a few of them and while I manage to reject some out of hand, in many cases I like too many companies . Even after doing in depth research and building conviction enough to buy a stock, it has happened so that I have not been able to hold them since I came across some other stock which seemed more hopeful . For example, I had Prince Pipes and Adani ports . I expected them to be good bets for long term and knew that they would not be showing incrementally better results immediately and the story would take years to fructify. I still think so but I have already sold them after holding for about 9 months each.
This would not have happened if I had not been looking out for better opportunities and thought that I had found them .While at the moment I am still confident about these better opportunities, I might again switch if these stay low for 9 months and I find something else .
I am not really sure how to or even whether to stop this continuous churning as PP or AP has not done anything yet to prove me wrong. What is the correct approach in case I do not have incremental capital to deploy ….
A. Buy, Hold and stop looking for other stocks if the bag is full
Or
B. Continue as I have been doing and be more choosy while selling or buying

You are very welcome to provide your opinions on this dilemma …

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B.
As mohnish pabrai says… consider the stock you hold as your wife and the stock you like (but not holding) is your GF. Don’t change for slight incremental like; change only if you are convinced that GF is 40-50 better than W…

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Have you explored the concept of core and satellite portfolios?

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I think, this is why the returns in the long run deteriorates for equity investors compared to Index investors. If we just find some 20-25 good ideas, then we are settled. Now there is no need for futher search to replace them. Any good stock, will give sufficient returns in the long run compared to debt products as well as index, provided we stick to it in its thick and thin. This is just like marriage. Just because you are married, doesnt mean that more prettier and more attractive girls are not there . We need to feel satisfied with our choices and be done with it. Otherwise there is no end to it. You will always find some or the other more good.looking, more earning and.more educated girl somewhere, …but you cant keep on changing it every day.

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Yes but its only in my mental accounting.The conundrum is about those stocks in which I have not yet grown enough conviction to hold long or consider as part of core holdings. Once I have moved it to the core,they are already in too deep to be popped out by a new stock.

You are absolutely right but the problem is in being sure that the ideas were indeed good ideas . Nowadays there is so much information (VP, MC, Twitter , News channels etc.) that its very difficult to filter actionable info from the noise . Recent trend I am noticing is that good investors with social media presence are busy to point out weaknesses in the investment thesis on their own suggested stocks or bragging about successfully selling at the peak after they have posted youtube reviews on the same company for long term investment with 10 year time horizon. In some cases value investors with superb experience & achievements are moving to momentum investing and calling it Techno-Funda. No doubt they will be very successful with their new approaches as well but the problem is that these guys are closer to home and have been more helpful in getting investment ideas or learning stuff in past 2 years than Buy and Hold gurus like Buffet or Lynch or Vijay Kedia .
Even if I buy a stock with full conviction that it will be good one for long term, continuous flow of ante-thesis makes me doubt it as I have only two years worth of experience and that’s very little by any yardstick .
I know the simple solution would be to chose the option A and tune out for a few months from all forums and social media but at the moment I am simply unable to do so :frowning: .
Being patient is the greatest virtue for a long term investor and unfortunately I do not have a lot of it yet. I only hope I get better at it .

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IMO, the problem with retail investor lies in the fact they were always into the look out for guess paper, shortcuts, crash course, one night study to pass the exam at the cost of hard grueling approach of completing the entire syllabus by burning mid night oil through out the year. Well, the smartness of these folks do get highlighted for passing the exam in short span of time while doing all year round of fun and masti with mocking intent to those who strives passionately.

Result is all out there in all professional field. At the end of the day people seek professional expertise and excellence from those who committed whole heatedly to the cause of achieving excellence than to those who just acquired information in the guise of knowledge! In one line - there is no shortcut for achieving highest level of expertise, excellence or the mastery of subjects. One has to undergo though the funnel of sheer and frustrating hard work.

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I think ,best solution to this problem is diversify in atleast 20 to 25 stocks for medium to large fund and dont sell for minor hiccups.

And one more point, take time before buying.Once u buy ,keep it for 5-10yrs or more.

… …

Quotes from" 100 bagger by cristopher mayer"

YOU SHOULD BE RELUCTANT SELLER

=If you are hunting for 100-baggers, you must learn to sit on your ass.
Buy right and sit tight.

WHEN TO SELL

In his book Common Stocks and Uncommon Profits, Phil Fisher had a chapter called “When to Sell.”

…If the job has been correctly done when a common stock is purchased, the time to sell it is—almost never.”

=But even Fisher allows thrre and only three reasons to sell:

A…You’ve made a mistake in original purchase

B…The stock no longer meets your investment criteria(change in fundaments)

C…Better opportunity

… Switching is treacherous .
Every stock that’s moving looks better than the one you’re thinking of selling. And there are always stocks that are moving.

…Investors too bite on what’s moving and can’t sit on a stock that isn’t going anywhere. They also lose patience with one that is moving against them. This causes
them to make a lot of trades and never enjoy truly mammoth returns

=So in summary

“If you’ve done the job right
and bought a stock only after careful study, then you should be a reluctant seller”.

.DONT SELL WHEN

=STOCK IS TOO HIGH OR HIGH PE
=STOCK HAS FALLEN
=STOCK IS GOING NO WEHERE

(Stock price is not indication for reason to sell)

A…STOCK IS TOO HIGH OR HIGH PE

=During periods of rapid share price appreciation, stock prices
can reach lofty P/E ratios. This shouldn’t necessarily discourage one from continuing to hold the stock.

B…STOCK HAS FALLEN

=Monster Beverage became a 100-bagger in 10 years,
…I count at least 10 different occasions where it fell more than 25 percent during that run.
… In three separate months, it lost
more than 40 percent of its value.
… Yet if you focused on the business—and not the stock price—you would never have sold. And if you put $10,000 in that stock, you would have $1 million at the end of 10 years

C…STOCK IS GOING NO WEHERE

=Sometimes stocks take a long time to get going. Phelps had plenty of examples of stocks that went nowhere (or down) for years but still delivered the big 100 to 1

100 baggers by cristopher mayer

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Philip Fisher on the contrary to your post has suggested to invest only in 5 to 6 largecaps…but if you are putting into midcdp, he suggested make it fouble that is 10 to 12 stocks and never invest into two stocks where clients are common, or business is similar or prodcts are same…then invest only one out of two companies, not both.

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