Dear All,
As the year comes to end, it is time to reflect on many aspects of life including the journey of investing ( value ? not sure). One way to look at this is evaluate PF return in numbers ( x %), the other indicator would be the quality of these returns ( how less stressful was the journey). The other qualitative aspect is as an investor how one has progressed over the last several years. This is where VP comes into picture and the community here has been of great help and asset. I have been in market for last 15 years ( with x % CAGR) but last few years at VP has helped me improve the journey as an investor mostly on qualitative part. Although this coincided with bull run in mid cap and small cap stocks, I think there is method in madness and this will be tested again in the next big bear market.
Coming to PF, the year has been good for me, with PF return of 56 % ( Jan to Dec) in 2015. I am sure 2014 was an excellent year for many of us here, with market being up 30 %. But this year with - 6 % index, PF return is more satisfying at personal level.
As I have shared earlier, I follow a highly concentrated PF with generally 5-7 stocks with very high convictions. Generally I prefer buy and hold strategy for longer terms, but this year dye to range bound market, I had to tweak the strategy in the middle of year for better returns.
I prepared a table listing all my high conviction stocks, valuation levels and my allocation. I continuously evaluated depending upon over/under valuation levels which stocks is expected to give higher return in next year. Some of the stocks were Ajanta Pharma, Can fin homes, Kitex, Kaveri, Cupid, Torrent pharma, Alembic, capital first, Repco Home, Shilpa, Avanti Feeds, PI industries. It is important to note that these are the stocks I had amlost equal, but high level on conviction. The other consideration was to avoid short term capital gains tax, so min holding period had to be 1 year. So when mkt was going no where, I shuffled my PF and sold high valuation stocks with smell of some trouble and moved to low valuation stocks. This worked. I could get out of Avanti, Kaveri, Repco, Shilpa, PI on time, so the opportunity cost was very low. Since one has equally high conviction in the next stock, it didnt matter much if one is not paying STCG taxes. I has misses also, like missed to do the same when Kitex was 1000 +, got carried away the valuation mkt was giving. The other thumb rule was to remain 100 % invested all the time, so that one doesnt miss out on mkt returns.
My Present PF is as below
Can fin homes 28 %
Torrent pharma 25 %
Kitex 19 %
Cupid - 17 %
Omkar Speciality & Capital trust - 10 %
The stock which I have very high conviction at this level are Kitex & Cupid,
Can fin should also be a 25 - 30 % compounder.
To be honest,2016 looks very challenging , I will be happy with a 35 - 40 % return on a higher base.
Wishing the entire community a Very Happy and High Return New Year
I am thankful to many in this community for helping me in this journey and a special thanks to @hitesh2710 bhai, whose has helped (many like me) and I find myself very close to his kind of thought process and mental model, who is anyway 10/15 year ahead (long way) of me in this journey and always look forward to learn from all members from this community and contribute to the best of my abilities.
Cheers
Santosh
