Portfolio for next 5-10 years

In my opinion, if you are looking for a time horizon of 15-20 years there are a few points which deserve utmost attention in selecting the businesses to invest

  1. B2C Business - Generally B2C businesses can scale up and that is what you need for the business to grow over 15 to 20 years… You can try and look at B2B businesses where in you are pretty sure that there will be this “scaling” up in the next decade or two … In terms of capital allocation - 70% on B2C and 30% on B2B might make sense …
  2. Honest and competent management - No business will go through 15-20 year span where it doesnt face problems … The problems will come in various forms and to solve them you will need to have a honest and competent management…
  3. Buying price - Since the horizon is long, I would suggest to wait for decent correction in markets before buying… Generally there are decent corrections every 9-12 months and that would be the time to park your money in … Buying at current market prices might set you back if markets correct and chances of that happening are pretty decent since most stocks are trading at a premium …
    4)Diversification - Going behind too many stocks might not help …Rather than putting money in 25-30 stocks, i would suggest to focus on 5-10 stocks first (the ones which are established names like Eicher motors, etc) … If you have regular cash flows in the form of salary, business income, etc, you can keep adding other stocks or add more of the established names itself … It will give you the time to develop the conviction on the “not so” established names … You can take a tracking position in the “not so” established names to begin with if you think that helps in tracking and developing the conviction …

Disc: Views are personal. Please do your own due diligence …

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