Hi All,
This is my first post on this lovely forum and would need help of the seniors here.
I have decided a method on how I would churn my portfolio and need your feedback if there is any issue with this approach. Any stock that I enter should be with a view of atleast 5x returns. Once I reach 5x, I will sell half of the holding and keep the rest forever. This way I get atleast 2.5 x return from a stock and if the stock becomes a future multibagger, I don’t lost much on the run. I would not sell the stock before it reaches 5x unless there is any severe change in fundamentals.
Any feedback and suggestions welcome.
There are no rules as to when and how to book profits, it is all personal. Although, it is said that to enjoy big returns, serious returns, one need not sell, half or any portion, but leave the stock run its course.
Leaving and not selling could turn out to be a sad decision in the future if price falls unexpectedly. A few days of lower circuits for any reason, and half of accumulated profits over the course of a few years, are gone.
Selling half will not bring tears, as the profits are real, and the proceeds will be used elsewhere, but it could turn out to be a costly mistake, if the unsold half becomes large and becomes the best investment of our investing journey, the stock which made us, so to speak, and the thought of what if we had not sold can cross our mind.
Many other possible scenarios, on both sides. All of these are easier said than done.
Have you had the experience of a five bagger and sold half of it? If you have not, then I guess, the decision will not be as simple as you posted.
I have not experienced the selling myself, but for the positions which have the potential to go that way, which I believe will have material impact on the journey, I will follow the price. And, as we gain experience, the quality of patience can be acquired.
1 Like
Hi, I would like to understand the fundamental analysis part of yours, since you are focused on 5x, how do you build conviction? Qualitative or Quantitative factors, etc.
I’m no expert in investing, with my basic knowledge and what I’m practising is to churn the stocks if i see the valuation is extremely higher that their past averages or If there is a change in fundamentals like impact in their earnings over the long term or if i needed some money for something important, only then i’ll think about churning it.
if you like reading, you shall read the mastering the market cycles, great book i read recently gave lots of ideas about churning when and how it can be helpful. let me know if you would like to know summary of my learnings from the book.
Hi Chaitanya. Thanks for the reply. The reason I have decided to keep the remaining shares forever is to not lose a multibagger in case if it’s have its run. Also I will have no regret booking profit at 5x even if the stock becomes a 100x because you still get to enjoy 50x returns and any returns that you may have earned with the 2.5x amount you used to buy another stock. When you sell a stock or keep it forever, in hindsight you will regret if your decision is wrong. That’s why I have come up with a fixed process to follow in any stock that runs 5x. I did sold 2 of the stocks at 3x and 4x and they ran to become 10x and 18x and that’s the reason I have come up with this process. Not sure if I will have such a multibagger in my portfolio in future or not or will be able to follow my own process but as of now that’s the plan.
1 Like
HI Visha, I have started my journey just 5 years back and am just at my baby steps on this journey. The reason i am thinking about portfolio churning first as I could not decide which is the best to go about. If I should churn the portfolio every now and then or keep the stocks forever, so I have come up with this middle path. I decide my investing based on the sectors first. I am not interested in cyclical sectors. If I like a sector and feel it could have a secular growth, I will then deep down into individual stocks. Currently I am invested in Shalby, UTI AMC, Nuvama, Ujjivan Small finance bank, Benaras Hotel, Basilic fly Studio. Will keep on adding new companies from the cash flow generated from my job.
1 Like
Hi, same situation happened with me. I sold 50% AMARAJA BATTERY stocks when I get 100% of return and even I was thinking same for JKPAPER but after researching through chart, I thought that let me hold for little until it reaches the resistance level and now I’m in 60% of profit(Before that only 20% return). So at the end of the day it is matter personal perspective. But after selling don’t regret it (but happens many time).
hi sir .as you said you have 5 years experience the market.
according to my understanding you will exit 50 % of the stock once it reach 5X .
i have question till today how many 5X stocks you seen in your PF (remember u seen only Bull market not even a bear market ,after the corona index itself given 3X Return )
I feel like this is a myth .to run behind a multi bagger is stupid mind set .focus on portfolio not on stocks .try to double the PF .
Try to study how to double your Portfolio not the stock
1 Like
