*Buy Growth Large Caps, select midcaps, with EPS growth of atleast 10% over a long term.
*Allocate 5% of PF size to each stock.
Exit at 20% gain. Flat out.
*Buy only those stocks that readily touch all time highs, which is a function of the underlying growth in the business.
*Entry is made near 200 Day Ema. Generally.
But, if the stock is a great one then near 50 Day Ema, like Asian, Pidilite, Dr.Lalpath, Havells.
If growth is slower, then waiting for 200 Weekly Ema for entry is also wise.
*Exit could be 10% for low beta stock like HuL, Shreeram, Icicigi, Gold where 20% feels like a stretch.
*Simple to execute.
*Quality of stocks in the portfolio is top notch.
*Very little room to go wrong.
*Gains are limited to 20%, so any follow up rally one would miss.
And that’s not too bad, because over the longer term a Large Cap PF is not likely to give better returns.
I am going to start posting the trades. Will start with a couple of recent ones.
Bought Auropharma at 740. (Actually 700)
At weekly 200 ema.
Although, growth is good but this stock tends to swing. So, 200 W-EMA, also pharma sector was being sold into so I waited for 700 for entry.
I wish to place the exit at it’s all time high. But that’ll depend. Will decide when 20% touches.
Bought Shreecem at 26400
Just like that I will be seeking opportunities.
I will be careful as to not to over-allocate to single sector, like Pharma and Banks currently.
Bayer Crop Science
Given that the Market is HOT right now, waiting for a 500 pt correction in Nifty to see where these stand, before taking a position.
Exit criteria is not well defined. Will there be any stop loss or time based exit? Otherwise only losers will form the portfolio after some time.
Isn’t Amararaja risky at this stage?
This strategy doesn’t apply to every stock on the board. The stocks that we will enter are growth stocks. So, yes, there could be a time that we end up holding laggards, but they are all expected to give returns within the year.
20% Annual return target on the overall PF should remain intact.
Currently, I have allocated only 30% of my total cash position to this strategy. Only after seeing a bear market through will I be more confident.
Yes. Therefore a small position of 1.5% of PF has been taken. Whereas, non-cyclical linear stories get a full allocation of 5%…like IciciGI, HuL, Britannia, Shreecem
Please let us know the price you bought.
New Trade: Honeywell Auto
Given full allocation of 5% at 40000
I prefer Nifty 50/100 stocks. Ones in Futures. But, Honeywell is an exceptional business. I am going to have a tough time selling it.
Similarly, another good business Whirlpool. Had allocated 4% of PF to it at 2000 and still holding. Target is All Time High.