@Ghonarbochon @Cshar @Mudit.Kushalvardhan …to get the max ROI and value what is the concetration you look at like idea single stock with all the money or 3 or 5 stock ?
alot of people just make portfolio post in valuepickr but their returns is not even close to a midcap MF so diversifying doesnt help we could have jsut invest in a MF if had to generate 15-20% CAGR
I have put my 80% into mutual funds and 20% into direct stocks. And in direct stocks currently i hold 18 stocks. But top 5 stocks are more than 50%.
As evident from earlier posts , I am all for diversification. If one is to invest significant portion of ones capital and sleep well, one has to be exceptionally strong in guts to invest in 1 , 3 or 5 stocks . I am more of a Lynch follower and not Buffet . Buffet did all the things that he nowadays says not to do in first 20 years of his career .I believe that limiting oneself to index stocks or largely followed stocks is the reason why most portfolios undeperform . Its utterly useless to spend ones own time and energy in direct investing if the returns are 15% . There is also one very good reason why low number of stocks are risky …
Can one invest 30% of ones capital in a stock and be cool if it goes for 20% LC or more or goes for 50% drawdown ? I have seen stocks where I had full confidence go down 50% .
Lots of experience and guts are needed to invest 10% of capital in a stock where very few sees value…but thats what makes the stock cheap and become a multibagger …
I have had about 6 stocks that became 3x to 20x , and similar number of stocks where I booked more than 25% loss . Its great fun to think what if I had invested 100% in that 20 bagger but one must also think what if it went down 50% ?
With diversification , one must ensure that he wins more times and by better margin than the times he loses but loss is inevitable.
@Cshar Thanks for your encouragement . I hope I grow stronger guts and concentrate investments like you do .
4 Likes