This line summarizes it quite well.
Most of the new strategies fizzle out in deep market corrections, and then investors need to sometimes revert back to simple value investing which is the age old strategy and keeps working after every few years and also work across market cycles if the investor has patience!!
Again to add, my post was not to say which strategy is better or superior. It was simply to appreciate our own style cutting all noise and thankful I could do that so far.
It’s like my chosen stocks follow different strategies instead of me and I give them that free hand to do that in cycles.
I may come across as with an opposite view, but I have to express my thoughts on this.
Our ultimate goal in investing is increasing our capital. To do that, we need to keep on upgrading our methods and strategies. When we start our investment journey, we come across some style of investing, which we follow and may fall in love with that strategy. But sticking to it and not improving or giving chance to ourselves to learn new ways and styles will defeat the purpose. Profit maximization is the core principle of capitalism. To do that, we need to expose ourselves to most of the methods available and then work on them to finetune it which is most efficient and effective. Evolution of mankind and the technology is on the basis of foundation of not getting satisfied and keep innovating and learning new things and new ways. If we stop that, we will become mentally old.
For momentum style, I happen to read about it quite a bit, and many will be surprised that momentum strategy is the oldest investing strategy , starting from Dutch Market. Then it was followed by Technical and just recently from 1929 onwards, from Benjamin Graham and Warren buffett, fundamental style became popular. So that way, we tend to think fundamental is old and momentum is new…but in reality its opposite.
Thats fine, market exists because of diverse views
Precisely. I think you completeley misunderstood my point. Who says that by sticking to my strategy capital will grow less? I am confident that for me my startegy would generate much better results than any momentum etc strategy otherwise its not big deal for me to learn anything new or try anything new.
Again above holds true only for cases like mine, to each his own. My post was being thankful of this realisation and invitation for like minded folks to indulge in more meaningful discussions on businesses, vision, strategy, portfolio construction, allocation etc.
Just to butt in here,
Capital allocation strategy or even finding the right strategy for every individual is a tough task.
Every individual has to identify it over time. Momentum, Fundamental, concentrated bets, or 50 share soup, F&O strategy at the individual level will all depend on one’s personality, temperament, ability to learn, and the power to withstand gains or losses without getting screwed up in the head.
I was checking my posts on portfolio strategy plans I had for myself and checking how it panned out amid ongoing bull and in between a big consolidation phase.
In case of Consumer discretionary, Whirlpool & Voltas have been weeded out. Hitachi AC somehow remains. What is interesting is that United Spirits & United breweries (which I added at that time as I missed the bottom fishing of my existing FMCG stocks in 2020 bottom by giving in to the noise of experts) forms bulk of this basket currently somewhere around 8.5% of portfolio.
Over the years I realized that Consumer durables is not really for me.
I would still hold Hitachi AC (probably eventually a Bosch company) as a part of my technology basket rather than a consumer durable company because of their focus on technology & research.
Technology had rewarded me quickly then, followed by a long correction & consolidation phase currently. It currently forms 10% of my portfolio in spite of selling around 1/3rd OFSS just before its 4x rise.
This is one part I would still like to be around 15% mark, so, although progress but Work in progress. Mistake to prune a conviction buy, although needed funds.
Well, this has been the real winner so far, thanks to Trent and this basket of Trent, Dmart & Spencer Retail forming 20% of current portfolio. This is a job well done, but again not because of my skills. Had I been aggressive in scaling this up, the rise of my highest conviction pick, Trent, would have have resulted in a much higher portfolio percentage of Retail.
Disc: Invested in above names hence biased. Not a buy/sell recommendation. Post only for learning & analysis purposes. I can be wrong in all my assessments & not eligible for any advice.
Please analyse shoppers stop, In tune expansions are agressive and same model like Zudio.
I may agree with you on good opportunities in other retail stocks, however I tend to chose stocks where I am not nervous to sell if and when they run up. For this, the promoter and group matters a lot and hence Tata’s Trent followed by Damani’s Dmart and a very very small allocation to Goenka’s Spencer.
The fisrt two have executed beautifully as well. We see and compare Zudio today when hardly 3-4 years back it was nothing. So what these companies would look like few years down the line we do not know. In such a big unknown, only certainity is ethical & efficient management & promoters.
While one can make tons of money in playing the turnaround etc cards in other stocks, they are not meant for me and I will fail at such plays no matter how big the opportunity may be.
Disc: Same as above
I am really getting amused by looking at my own comment few months back. It is somehow uncanny that the moment I feel extremely confident about myself as an investor - market has a strong & sure way of proclaiming leadership, supremacy and further enlightenment. Such extremely confident thoughts tend to usually occur to me right at the top of any cycle!
Anyways, I was always aware that anytime a 20-40% drop in the stocks that I own is a possibility. Being aware of a possibility and when it actually happens are very different. It helps to be mentally ready though.
I still believe in my processes though. Post was only an acceptance & reminder of being humble in all transitionary phases of this wonderful journey.
Disc: Post only for learning purpose. Not eligible for any advice. Being self-critical as it is necessary to remain humble and carry on.
Random thoughts on an investment I had thought to be “Simple”.
Burger King has been a perfect example of failure in “buy what you see” because of precise reason of “not understanding” the complex business dynamics beyond what I see and percieve as a normal & “simple” business.
A low capital allocation and part exit when I needed funds saved the day for me. Although still invested with a last tranche that did not get opportunity to exit.
On lookout, for swap, of other currently beaten down stocks but with “simpler” business and “true what you see” business models. So far unsuccessful.
A good learning fees paid here so far for what not to do in Simple investing.
disc: Highly biased views with very small allocation. May change views anytime with changes in business/markets. Not a buy/sell recommendation. I can be wrong in all my assessments.
More than an year has passed with no comments from me nor others clearly proves the dearth of like minded and interested folks in similar strategy. Should I be concerned? Certainly not as I see it as my strength to think differently from most (hopefully) and that gives me the edge I desire over long term. Key risk, as always, is valuations & momentum investors taking my target stocks to crazy levels.
Biggest lesson last year has been from Trent. The lesson is that even top corporate governance, most ethical business, excellent growth even now & throughout can still fall 60% or more anytime. Why? Valuations & momentum crazy. The gap - I had anticipated a 30 to max 40% bubble. It proved double of that. For folks who think that I think Trent was a mistake in my portfolio, I need to mention that its still a 7-8x in 5 years at a good allocation for me. Still loosing 50% of paper profit is tough. Well I liked every bit of it as a maturing investor taste ( liked because underlying company was good, had it been a laggard in business & strategy and hence falling, I would have definitely disliked and been brutal in exit). I enjoyed the fall as a wonderful learning experience and embraced it as Trent was one company I eanted to allocate more to anyhow. The gap in anticipation of bubble however caused me in adding on to existing position rather quicker than I should have. No regrets and apetite satiated, that is, for now.
Still remeber any stock can fall 80-90% anytime that is if its a wonderful business, promoter or company….for the bad ones go only few percentage more down to bust levels…. An excellent learning & realization.
Precisely thats why I consider my 36x in 5 years Hitachi energy as 1/4 th of its current value in my balance sheet. I bought & still hold it for technology while market is bubbling it for energy currently, and righly so, as runway seem huge….until one day growth normalizes.
Coming to other major learnings, Hope investments, have again proved to be bogus. It was Nykaa earlier, then moved to spencer retail. So, finally exited this retail company & doubled down on Trent during extreme pessimism.
Sundrop brands, another borrowed hope from big investors, successfuly exited and replaced by top notch IT engineering & digital infra firms from Tata.
Current Hope is built into 2 companies - Tatas satellite communication kid Nelco & Max groups senior living Max India….had been adding them in crashes. Not sure will exit them & replace them with something else in next big crash in medium term future.
Most of portfolio companies remain same, except incremental allocation (via fresh & switching of hope bets) to like of Trent, Dmart, Asian Paints, IT engineering, IT consulting, digital infra, P&G group etc. (and of course some changes here & there & maybe some I cannot remember at the moment)…well the ones already in my universe which presented with the most opportunity and were screaming at me to add.
My take of current two most hot topics - The war….well I would not call which war… ecause over last few years there have been some or the other….I wish there are no more wars….thats the only take I have. Rest doesnt matter.
The other hot topic is AI….I am at leadership position in technology and have seen the the CIOs have no clue about it either. Every few years something or other doomsday event comes for tech firms…well imagine if not then they would have growth linearly at exponential rates and reached the moon already…..but this is a rationale world and every industry must have its own hurdles to help the lower folks like me to add on to existing positions and build a sizeable portolio of solid tech & digital infra firms as neither do i have money to reach the moon for them nor the foresight to buy them in satiating apetite in previous resets…..
The only blip - a simple ill educated lazy investor like me, while has all time in world to read businesses & devise startegies ( the thing such minority folks like) but not the zeal to learn art of valuations or charts to decide on better entry points for adding….maybe because i didnt like maths back at school, one of orimary reason i could not crack the top B school entrance, as in rest areas I was a 99.9 percentile…..so rather than delving into an area i am neither top notch nor have a liking, I will give some profit (or bear the loss) on the table for the fellow investors and concentrate & build on areas which I like and have the aptitude for….
The final, and most important, aspect for me which is growing dividends YoY, has been working just fine with most of my holdings turning more profitable & increasing dividends every year, irrespective of share price & market conditions….The ultimate goal is to take these dividends at a scale that could contribute significantly & impact decisions like financial independence…..
I had initially thought to stop writing on this thread but few days back I happened to read some past post I had written and learnt something from it and felt this thread on eveolution & learning of a simple investor can be a journal for self or some close friend or family, who would if any day be interested….hence continued…..
Disc: Same as always, invested in all names above & highly biased & even critical. Not a buy/sell recommendation. Not eligible for any advice. Certainly not a registered advisor. Post only for learning. I can be wrong in all my assessments.
Hi,
Thanks for the update. I logged in after a long time to reply to your thread. In fact, I visited the forum after a long time and fortunately found your post among the latest ones… I highly appreciate you giving updates. I am even more appreciative because my investment style matches yours in many ways.
I have been very busy for the last two years and not able to spend any significant time on investing. This has forced me to stay with my current holdings and, in fact, finally enabled me to reduce my portfolio to a more manageable size. Now I only occasionally check my portfolio performance and company updates. This has also helped me to reduce portfolio churn!
Trent used to be my largest holding, and this drawdown affected my portfolio somewhat, but I kept faith and even added to my position at the recent low. I believe it has the potential to deliver compounder-like returns going forward, similar to Titan.
Quite a few years ago, Taher Badshah (I could be wrong), who was then at the helm of Motilal Oswal, spoke about the benefits of starting the investment journey early. Among the reasons he gave was that the earlier you start (preferably at manageable valuation or at peak pessimism), the more able you will be to be patient when good companies go through drawdowns, since you may still be sitting on positive returns. This helped me with Trent…
Another benefit of an early start is an overall positive portfolio return, which can help sustain the courage to hold a few companies despite their large negative swings, if the thesis remains intact! This has helped me hold on to my positions in 3B Blackbio…
Thank you and keep updating your portfolio and share your insights occasionally.
